Ten day weather forecast: North America
Most grain producing areas in the USA can expect good rainfall over the next ten days.
Ten day weather forecast: South America
The northern areas in Brazil, as well the far south can expect good rainfall. Dry weather predicted for most parts of Argentina with minimum rainfall in the east.
Note: CPT = Cape | PMB = Pietermaritzburg
|July 2019||September 2019||December 2019||March 2020|
|PMB Import Parity||R 2 856||R 2 808||R 3 016||R 3 140|
|CPT Import Parity||R 2 532||R 2 808||R 2 753||R 2 865|
|SAFEX Yellow Maize||R 2 511||R 2 570||R 2 638||R 2 671|
|Export Parity||R 2 089||R 2 127||R 2 224||R 2 366|
- CBOT prices in the USA currently trade at a six year low. The graph illustrates the factors that triggered the massive decline in prices as well as the weight of each factor.
- The low price of soybeans can mainly be attributed to the trade war between the USA and China which started May 2018.
|5 May ’18||29 Apr ’19||5 May ’19||2014-2018 (Average)|
|5 May ’18||28 Apr ’19||5 May ’19||2014-2018 (Average)|
The Rand is currently trading above the 200 and 100
moving averages. It appreciated against the US
Dollar after President Trump announced higher
tariffs on Chinese imports. Another contributing
factor to the stronger Rand is the successful South
African national election on Wednesday, the 8th of
May, which was completed without incident. At the
time of writing this report, the Rand was trading at
R14.36 to the US Dollar.
European Union grain import increases by 40%
The European Commission’s new shortterm outlook indicates that maize imports increased by 38.6% (from 14.5 million to 20.1 million tons in the 2017/18 season). This equates to a 50% increase against the five-year average. Most grain imports will originate in the Ukraine.
President Trump threatens trade war peace
The President of the United States of America, Donald Trump, announced that should China not reach an agreement with the USA in the short-term, higher tariffs will be put into place on Chinese goods. The announcement sparked tension between the two leading economies, and prices on the stock market depreciated drastically.
El-Nino still a possibility
Sea surface temperatures remain at weak El Nino levels. Although it is too early to be certain about the status of surface temperatures in the El Nino areas over the next few months, there are some indications of a further weakening of El Nino conditions. The main cause of this is the cooling of sub surface water temperatures in the El Nino areas. More concrete information will only come to light in around July.
- SAFEX yellow maize prices are trading very close to CPT import parity. Upcoming future contracts will already trade below these levels. Pressure on the local market will increase, as the harvesting season is set to kick-off.
- USA crop planting progress is far behind the average, due to wet conditions in key production areas. It is too soon to tell whether this will have an impact on the market. USA producers demonstrated five years ago, in similar conditions, that they are able to plant large amounts of hectares in a short period of time.
- Soybean producer deliveries increased in pace over the past week – a clear indication that the harvesting season is in full swing. Soybean prices are under pressure as a result of this.
- The stronger Rand added extra pressure to the parity prices and, is one of the causes of the losses on SAFEX over the past two days.
Producer sells 100t soybeans to Rand Agri at R4 728 (SAFEX)
- R3 309.60/t (70%) paid out to producer.
- R1 418.40/t (30%) withheld by Rand Agri.
- March 2020 soybeans trade at R5 147/ton SAFEX.
- Rand Agribuys a position on behalf off the producer in March 2020.
- Should the March 2020 price move to R5 300 until February 2020, the producer will make a R153/tprofit (R5 300–R5 147).
- The R1 418.40/t + R153/t = R1 571.40/t is paid out to the producer.
- Stay in the market for longer –up to 20 February 2020.
- Get your price any day, and receive your money within a week.
- Earn interest on the capital of the 70%.
- No storage costs.
- Measurable instruments on March’s price.
- If the market moves below R5 147 and decreases by R1418.40 to R3 728.60/t, the producer needs to close his position or maintain his position, paying in for market shortfalls every day.