Agri-Weeklywebapps.daff.gov.za/AmisAdmin/upload/30 Sep 2016.pdf · FNB Agri-Weekly Page 2 Domestic:...

Agri-Weekly

30 September 2016

Yellow maize market (Graph 1)

International:

US maize prices ended in negative territory under

pressure due to the favourable harvest weather and

good crop ratings of 74% in the good to excellent

category. Harvest progress was however still behind

last year at 15% complete. In its latest report of 29 September 2016, the

International Grain Council still projected a record

global grain crop for 2016/17 at 2.03 million tons

which is unchanged m/m. Over half of this is maize,

whose estimate was lowered slightly from August but

still at a record high of 1.03 million tons. Dry weather

conditions in parts of the European Union (EU) and China were cited as reasons for the downward

revision of the estimate. Meanwhile, China has reportedly given approval to two companies to export up to 2 million tons of maize

in an effort to reduce some of its surplus. This combined with an already record global supply outlook will

continue to weigh heavily on international prices. The livestock sector, especially the intensive production

systems such as poultry, pork and feedlots will be the major beneficiaries in terms of reduced cost of

feeding. In the weekly ethanol update, the US Energy Information Agency (EIA) showed that ethanol production

was up 8,000 barrels per day for the week ended 23 September 2016. Ethanol stocks were up 600,000

barrels at 20.6 million barrels. Ethanol stocks and price trends are important as maize is a major feedstock

in ethanol production in the US.

Source: USDA, PSD

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Graph 1a: World maize production trends (‘000 tons)

0%

5%

10%

15%

20%

25%

30%

35%

0

50,000

100,000

150,000

200,000

250,000

Graph 1b: World maize- Ending Stocks vs Stocks/Usage ratio

Ending Stocks Stocks/Usage ratio

Graph 1: Yellow maize prices

750

1,070

1,390

1,710

2,030

2,350

2,670

2,990

3,310

3,630

3,950

4,270

02-Oct -15 05-Feb-16 10-Jun-16 14-Oct -16

(R/ton)

Import parity Export parity Domestic

* last two data points are preliminary

____________________________________________________________________________________________________________________________________________

FNB Agri-Weekly

Domestic:

It was another week of sharp losses on the maize market due to the combined influence of a resurgent

rand, seasonal harvest pressure and the upward revision of the current season crop.

The average weekly YMAZ prices dropped by 3.4% w/w but still 3% higher y/y at R3,002/t. Prices have so

far fallen by R1,020/t from the 2016 peak of R4,021/t earlier in January.

Early in the week, the Crop Estimate Committee report showed an upward revision of its yellow maize

crop by 2% to 4.3m tons, although remaining below last year’s 5.2m tons. The total maize crop estimate

was raised 3.3% from the previous estimate to 7.54m tons.

Weekly producer deliveries came in at relatively lower with overall volumes at 40,344 tons with yellow

maize at 12,310 tons. Cumulative season to date deliveries were reported at 6.2m tons.

The latest trade data was bullish with yellow maize imports reported at 60,113 tons, which is slightly higher

w/w. Exports however slowed to 4,171 tons, down 25% w/w.

Source: JSE, Own Calculations

SAFEX (Rand/ ton) CME (US$/t)

30 September 2016 WMAZ % w/w YMAZ % w/w CBOT Corn % w/w US CORN % w/w

Weekly Avg R 3,615 -5.6% R 3,002 -3.4% R 1,803 -2.8% 146.3 -2.3%

Dec-2016 R 3,593 -7.3% R 3,066 -1.6% R 1,818 0.3% 132.62 0.1%

Mar-2017 R 3,542 -3.7% R 3,041 -1.6% R 1,909 0.7% 136.48 0.1%

May-2017 R 3,009 1.9% R 2,655 0.2% R 1,964 -0.4% 139.24 0.2%

Jul-2017 R 2,819 0.2% R 2,626 0.6% - - 141.92 0.2%

Sep-2017 - - - - - - 144.60 0.2% Source: JSE, CME

OUTLOOK

We are entering a period in which weather will become a major price driver for the local market. With

planting period fast approaching, rains are needed to ensure good soil moisture for crop emergence.

Globally, the abundant supplies will continue to exert downward pressure on prices.

-400-340-280-220-160-100

-402080

140200260320

Graph 1c: Weekly YMAZ price change (R/ton) Last 5 months

2300

2400

2500

2600

2700

2800

2900

3000

3100

3200

3300Graph 1d: JSE YMAZ Futures, Jul-17 (R/t)

0

10,000

20,000

30,000

40,000

MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR

Graph 1e: Monthly Yellow Maize Export Trends Marketing Seasons, (tons)

2015/16 2016/17

0

20,000

40,000

60,000

80,000


Graph 1f: Total SA Maize Export Trends Marketing Seasons, (tons)

2015/16 2016/17

____________________________________________________________________________________________________________________________________________

FNB Agri-Weekly

Source: SAGIS;

30 September 2016 Calculated Yellow Maize Options prices (R/ton) RMB commodity desk (Tel: 011 269 9005)

Dec-16 Mar-17 May-17

Ask Put Call Ask Put Call Ask Put Call

3,100 346 312 3,080 322 283 2,700 309 264

3,060 324 330 3,040 300 301 2,660 286 281

3,020 302 348 3,000 278 319 2,620 264 299

White maize market trends (Graph 2)

International: As with their yellow counterparts, US white maize

prices lost ground on advancing harvest and better crop ratings.

US white maize reversed last week’s gains and shed 1.8% over the week at US$136/ton, which is 9% lower compared to last year.

Domestic:

Weekly white maize prices posted the biggest

losses on large import volumes, the slightly firmer

rand and the improved supply outlook from the

CEC report.

The CEC raised its estimate of the national white

maize crop by 5% from last month to 3.3m tons,

which weighed heavily on the market.

White maize prices averaged R3,615 per ton, down 5.6% w/w but 14% higher y/y. Prices have so far shed

a whopping R1,547/t from the 2016 peak of R5,162/t.

After a brief hiatus, maize imports resumed with 15,686 tons from Mexico arrived at the domestic ports,

with the year to date reaching 330,634 tons. Exports recovered slightly from last week at 13,225 tons, and

the cumulative year to date at 202,995 tons.

OUTLOOK

We are entering a period in which weather will become a major price driver for the local market. With

planting period fast approaching, rains are needed to ensure good soil moisture for crop emergence.

Globally, the abundant supplies will continue to exert downward pressure on prices.

30 September 2016 Calculated White Maize Options prices (R/ton) RMB commodity desk (Tel: 011 269 9005)


3,640 555 508 3,580 586 548 3,040 495 464

3,600 531 524 3,540 563 565 3,000 471 480

3,560 509 542 3,500 540 582 2,960 448 497

0

100,000

200,000

300,000

400,000

500,000


Graph 1g: Monthly Yellow Maize Import Trends (tons) Marketing Season

2015/16 2016/17

0

100,000

200,000

300,000

400,000

500,000


Graph 1h: Total Monthly SA Maize Imports (tons) Marketing Season

YM 2016/17 WM 2016/17 YM 2015/16 WM 2015/16

Graph 2: White maize prices

680

1,160

1,640

2,120

2,600

3,080

3,560

4,040

4,520

5,000

5,480

02-Oct-15 05-Feb-16 10-Jun-16 14-Oct-16

Impo rt parit y Expo rt parit y D omest ic

(R/ton)

* last two data points are

preliminary

____________________________________________________________________________________________________________________________________________

FNB Agri-Weekly

Source: JSE, Own Calculations

Source: SAGIS;

Wheat market trends (Graph 3) International:

US prices moved sideways to weaker on upward

revisions of the global crop while the stronger US

dollar and quality concerns in Australia helped limit

losses.

The IGC raised its global wheat crop estimate by

4m tons to 747 million tons.

Elsewhere, in Russia where current season crop is

estimated at record highs, planting for the winter

wheat is reportedly advancing rapidly 64%

complete.

In Australia, heavy rains are threatening the size

and quality of the wheat crop. This is of much

concern as it is major supplier high protein wheat. Given the reported quality issues in France as well, the

supply outlook for the good quality milling wheat is tight.

Due to low local supplies of wheat in India, the government of India has reportedly dropped the wheat

import tariff from 25% to 10% to curb the strong rally in domestic food prices following a drought season.

-300-240-180-120

-600

60120180240300360420

Graph 2a: Weekly price change (R/ton) - JSE WMAZ

2300

2500

2700

2900

3100

3300

Graph 2b: JSE WMAZ Futures, Jul-17 (R/t)

0

20,000

40,000

60,000


Graph 2c: Monthly White Maize Export Trends (tons) Marketing Seasons

2016/17 2015/16

0

20,000

40,000

60,000

80,000


Graph 2d: Total SA Maize Export Trends Marketing Seasons, (tons)

2015/16 2016/17

0

50,000

100,000

150,000


Graph 2e: Monthly White Maize Import Trends (tons) Marketing Season

2015/16 2016/17 Cumulative

0

100,000

200,000

300,000

400,000

500,000


Graph 2f: Total Monthly SA Maize Imports (tons) Marketing Season

YM 2016/17 WM 2016/17

Graph 3: Wheat price trends

500

940

1,380

1,820

2,260

2,700

3,140

3,580

4,020

4,460

4,900

5,340

02-Oct-15 05-Feb-16 10-Jun-16 14-Oct-16

Import parit y Export parit y D omest ic

(R/ton)


____________________________________________________________________________________________________________________________________________

FNB Agri-Weekly

R 4,545

R 5,120

R 4,705 R 4,240

3860

4060

4260

4460

4660

4860

5060

5260

5460

05-F

eb-1

6

19-F

eb-1

6

04-M

ar-1

6

18-M

ar-1

6

01-A

pr-

16

15-A

pr-

16

29-A

pr-

16

13-M

ay-…

27-M

ay-…

10-J

un

-16

24-J

un

-16

08-J

ul-

16

22-J

ul-

16

05-A

ug-

16

19-A

ug-

16

02-S

ep-1

6

16-S

ep-1

6

30-S

ep-1

6

Graph 3d: JSE WHEAT Futures - (R/t)

-300-240-180-120

-600

60120180240300360420

Graph 3c: Weekly JSE Wheat price change (R/ton)

Source: USDA, PSD

Domestic:

Wheat prices on the JSE surprised on the upside despite weakness on the international front and further

rand gains.

The CEC made an upward revision to area estimate for wheat by 10,000ha to 505,150 hectares. The

second production estimate was thus revised higher by 1% to 1.7 million tons.

The weather outlook for the wheat areas has improved and will boost crop prospects. The wheat crop is

reportedly in good conditions so far.

Trade data was also bullish with imports reported at 51,141 tons, bringing the total for the 2015/16

marketing season to 2.03 million tons which is slightly ahead of earlier projections of 2 million tons.

Nonetheless, no exports were reported for the week.

Wheat prices averaged R4,181 per ton, up1.6% w/w and1.9% y/y.

OUTLOOK

Quality will be the main driver of prices internationally as crop ratings in key export markets indicate

increased variability. On the domestic front, the currency should cushion downside risks stemming from

abundant global supplies.

Source: JSE

30 September 2016 JSE WHEAT

(R/t) % w/w US HRW (US$/t) % w/w US SRW (US$/t) % w/w

Weekly average R 4,181 1.6% 153.57 -0.3% 157.52 -1.0%

Dec-2016 R 4,156 -1.0% 152.63 -1.4% 147.71 -0.6%

Mar-2017 R 4,246 -0.8% 158.73 -1.4% 156.01 -0.8%

May-2017 R 4,257 -1.5% 162.55 -1.3% 160.93 -0.8%

Jul-2017 - - 166.23 -1.1% 164.39 -0.6%

Sep-2017 - - 171.59 -0.8% 169.61 -0.2% Source: JSE, USDA, CME

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

Graph 3a: World wheat production trends (‘000 tons)

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

50,000

100,000

150,000

200,000

250,000

300,000

Graph 3b: World wheat: Ending Stocks vs Stocks/Usage ratio


____________________________________________________________________________________________________________________________________________

FNB Agri-Weekly

30 September 2016 Calculated Wheat Option prices (R/ton) RMB commodity desk (Tel: 011 269 9005)

Sep-16 Dec-16 Mar-17


4,240 418 376 4,320 456 415 4,360 483 444

4,200 395 393 4,280 433 432 4,320 461 462

4,160 374 412 4,240 411 450 4,280 439 480

Source: SAGIS;

Oilseed market trends (Graph 4)

International:

The increased harvest pace, reports of better

yields and a generally large crop kept prices in

the US soybean complex under pressure.

US harvest was reported at 10% complete,

though still lagging last year’s pace due to rain

induced harvest delays. Ratings remained

steady at 73% in the good to excellent category.

US weekly export sales came in at 1.6m tons,

all for the marketing year 2016/17. Due to

abundant global supplies, focus has now turned

to quality and the US soybean is by far the

highly sort.

On the back of higher yield expectations for the US, the IGC projected the 2016/17 global soybean

production up 4m tons from the previous estimate to 329 million tons, which is 4% higher y/y.

As indicated earlier in the maize commentary, the higher grain and soybean output will benefit the

livestock sector in terms of lower feed costs.

Meanwhile, planting is reportedly underway in Brazil with progress at almost 2% of complete.

Source: USDA, WASDE, PSD

-

80,000

160,000

240,000

320,000

400,000

480,000

OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP

Graph 3e: Wheat Import Trends (tons) Marketing Season

2013/14 2014/15 2015/16

0

10000

20000

30000

40000

0

80000

160000

240000

320000

400000

480000

OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP

Graph 3f: Wheat Import & Export Trends (tons) Marketing Season

IMP-2014/15 IMP-2015/16, RHSEXP-2014/15 EXP-2015/16, RHS

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000Graph 4a: World soybean production trends (‘000 tons)

0%

5%

10%

15%

20%

25%

30%

0

20,000

40,000

60,000

80,000

100,000

Graph 4b: World soybean: Ending Stocks vs Stocks/Usage ratio


Graph 4: Derived Oilseed prices

3,480

3,920

4,360

4,800

5,240

5,680

6,120

6,560

7,000

7,440

7,880

02-Oct-15 05-Feb-16 10-Jun-16 14-Oct-16

Derived Soya Derived Sunflower

Sunflower-spot Soya-spot

(R/ton)


____________________________________________________________________________________________________________________________________________

FNB Agri-Weekly

Domestic:

Oilseed prices weakened due on spill over losses from the international market coupled with further rand

gains.

Soybean prices shed 2.7% over the week and averaged R6,140/ton, but still 12% higher y/y. The overall

soybean crop for 2015/16 was revised down by 1.2% m/m to 741,550 tons, which is well below the 1m

tons attained last year.

Sunflower prices were down 1.3% w/w and 3% y/y at R6,170/ ton. The local sunflower crop estimated was

revised higher to 755,000 tons, up 13% y/y.

OUTLOOK

The bullish global supply outlook will continue to limit further upside for prices in the oilseed complex.

The renewed rand gains will continue to exert downward pressure on local prices. However, weather will

become a critical factor for price direction in the medium term as we head in to the planting season.

Source: JSE

30 September 2016

JSE SUNS (R/t) % w/w

JSE SOYA (R/t) % w/w

US SOYA (US$/t) % w/w

Weekly avg R 6,170 -1.3% R 6,140 -2.7% 374.00 -3.6%

Dec-2016 R 6,450 1.4% R 6,200 -0.3% 354.73 -0.1%

Mar-2017 R 6,435 1.3% R 6,085 -0.7% 357.00 0.0%

May-2017 R 6,110 1.8% R 5,945 -0.3% 359.06 0.0%

Jul-2017 R 6,095 -0.5% - - 353.92 0.2%

Sep-2017 - - - - 354.73 -0.1% Source: JSE, CME

Oilseeds Futures 30 September 2016

Dec-16 Mar-17 May-17 Jul-17 Sep-17

CBOT Soya oil (US c/lb)

CBOT Soya cake meal (US$/t)

Calculated Sunflower Option prices (R/ton) RMB commodity desk (Tel: 011 269 9005)



6,500 716 666 6,480 781 736 6,160 771 721

6,460 694 684 6,440 759 754 6,120 748 738

6,420 672 702 6,400 736 771 6,080 726 756

-800-640-480-320-160

0160320480640800

Graph 4c: Weekly JSE SOY price change (R/ton)

-1,150

-920

-690

-460

-230

0

230

460

Graph 4e: Weekly JSE SUNS price change (R/ton)

____________________________________________________________________________________________________________________________________________

FNB Agri-Weekly

Sugar market trends (Graph 5)

International: Sugar prices retained the recent uptrend as

estimates still suggest a deficit for the year. Meanwhile, Brazil has reportedly experienced

some showers as many areas have been too dry.

Elsewhere, a smaller crop is expected India where sugar consumption will exceed production.

Raw sugar prices on the InterContinental Exchange (ICE) were up 3.1% w/w at US22.82 cents/lb, reaching a four year high.

ICE sugar futures were firm across the board with the Mar-17 contract closing at US23.0 cents/lb up 1.3% w/w while the sugar for May-17 delivery ended the week at US22.2 cents/lb up 0.6% w/w.

Source: InterContinental Exchange (ICE)

Source: USDA, PSD

Domestic: The September 2016 RV price was declared at R4, 995.63/ton, down R46.13 m/m. According to the Cane Growers Association, this is on the back of a lower sugar:RV ratio which despite

higher cane production resulted in sugar output of 1.601m tons, down 8,953 tons. The upside came from higher Local Market Demand Estimate (LMDE) of 1.587m tons, up 28,465 tons leaving no export availabilities given the decrease in output.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Graph 5a: World Sugar ending stocks trends (‘000 tons)

70%

72%

74%

76%

78%

80%

82%

0

50000

100000

150000

200000

Graph 5b: World Sugar production and % Cane

Total Sugar Production ('000t) % Cane

ICE Sugar Futures 30 September 2016

Mar-17 May-17 Jul-17 Oct-17 Mar-17

Sugar No.11 (US c/lb) 23.0 22.2 21.3 20.7 20.4 % Change w/w 1.3% 0.6% 0.2% 0.1% 0.1%

Graph 5: World Raw Sugar Price

No.11 (Usc/lb)

7

9

10

12

13

15

16

18

19

21

22

24

25

0 3 - Oc t- 15 0 1- Fe b- 16 0 1- Jun- 16 3 0 - Se p- 16

(USc/lb)

____________________________________________________________________________________________________________________________________________

FNB Agri-Weekly

FNB Business – Agriculture Meet our dedicated team of Agricultural Managers in various regions of South Africa

Name Location Cell phone Email Address**

Grewar, Oosthuizen EASTERN CAPE -Port Elizabeth 071 607 6850 grewar.oosthuizen @fnb.co.za

Edmund, De Beer EASTERN CAPE -Port Elizabeth 084 656 5634 edebeer1 @fnb.co.za

David, Dobrowsky FREE STATE -Bethlehem 083 387 7977 ddobrowsky @fnb.co.za

Martin, Louw FREE STATE -Theunissen 082 784 8880 mlouw1 @fnb.co.za

Chris, Bekker FREE STATE -Bloemfontein 082 560 1894 cbekker @fnb.co.za

Jan, Theron GAUTENG -Pretoria 082 556 7494 jantheron @fnb.co.za

Greg, Sparrow KwaZulu-Natal -Pietermaritzburg 071 684 8420 greg.sparrow @fnb.co.za

Jurgens, du Preez KwaZulu-Natal -Newcastle 063 688 9146 jurgens.dupreez @fnb.co.za

Herman, Claassens LIMPOPO -Tzaneen 082 370 5718 herman.claassens @fnb.co.za

Adolf , Grobler LIMPOPO -Bela-Bela 082 337 6040 agrobler @fnb.co.za

Stephan, Scheepers MPUMALANGA -Nelspruit 082 377 8516 sscheepers2 @fnb.co.za

Theo, Verwey MPUMALANGA -Pretoria 082 419 6086 tverwey @fnb.co.za

Pedrie, Van der Merwe NORTHERN CAPE -Kimberly 071 351 3439 pedrie.vandermerwe @fnb.co.za

Frik, Coetzee NORTHERN CAPE -Upington 082 497 4769 frik.coetzee @fnb.co.za

Johan, De Klerk NORTH WEST -BRITS 082 776 3477 jdeklerk2 @fnb.co.za

Johan, Strydom NORTH WEST -Potchefstroom 082 497 2274 cstrydom @fnb.co.za

Johan, Beukes WESTERN CAPE -Stellenbosch 082 372 4656 jbeukes @fnb.co.za

Lize, Morris WESTERN CAPE -George 082 928 8546 lmorris @fnb.co.za

Arno, Cloete WESTERN CAPE -Willowbridge 082 302 3621 arno.cloete @fnb.co.za

**Please ignore the spaces in the Email addresses; they were inserted to break the links.

Disclaimer: This report may contain certain opinions, predictions and assumptions and has been compiled from a variety of sources. Accordingly, you use the information

in this report (“this information”) at your own risk and should not rely on it as a substitute for obtaining any specific professional advice you require.

Accordingly, First National Bank, a division of FirstRand Bank Limited (“FNB”) provides no warranties or undertakings of any kind, whether express, implied or

otherwise, concerning this information, its accuracy and/or reliability. Neither FNB nor its holding company, subsidiaries or other group companies will be liable

to you for any claims, demands, expenses, losses or damages, of whatsoever nature, which you may suffer or incur by using this information.

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