Food for Thought

July 3, 2019

 

Ten day weather forecast: North America

The eastern parts of the USA can expect wet weather in the next 10 days.

10-day weather forecast South Americ

Ten day weather forecast: South America

According to the latest weather update, both Brazil and Argentina can expect dry weather the next 10 days

Yellow Maize Parity Graph of 3 July

Note: CPT = Cape | PMB = Pietermaritzburg

July 2019 September 2019 December 2019 March 2020
PMB Import Parity R 3 180 R 3252 R 3 298 R 3 355
CPT Import Parity R 2 739 R 2 967 R 2 903 R 2 968
SAFEX Yellow Maize R 2 775 R 2 896 R 2 878 R 2 681
Export Parity R 2 422 R 2 427 R 2 450 R 2 431

USA grain emerged and conditions

Emergence and Plantings of Corn and Soybeans

USDA report – 28 June’19 

United States Agricultural Report, planting forecasts

Yellow and White Maize Imports and Exports

Yellow and White Maize Imports and Exports

Planting Progress up to 28 June 2019

Maize. soybean and sunflower seed producer deliveries

The South African Rand traded weaker against the US Dollar during opening of the SAFEX trading hours yesterday. This supported the local grain prices and brought potential heavy losses on soybean prices to an end.

At time of writing the report the rand appreciated against the US dollar. Should the rand continue this trend, it will add pressure to the local grain market prices on SAFEX.

Europe biggest winners from hog crises

Top pork consumer China and its neighbors are gobbling up supplies from abroad as the deadly African swine fever virus ravages their own herds and causes millions of pigs to be culled. That has pushed prices in the European Union, which supplies more than half of China’s imports, to a five-year high.

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The latest USDA thoughts on US maize

Just a few weeks ago, analysts across the world were concerned that the excessive wet weather conditions in the U.S. would lead to fewer plantings and poor yields. This would have subsequently led to tight global maize supplies.

But when the U.S. Department of Agriculture released its acreage report last week, there was soon a realisation that the market misread the situation on the ground. The U.S. government indicated that farmers planted 37.1 million hectares in 2019/20 season, up by 3% year-on-year. It appears that farmers switched a few soybean hectares to maize due to attractive prices in June 2019. As a result, soybean plantings are down by 10% year-on-year to 32.4 million hectares in 2019/20 season.

.Read more

South-African Maize Market exceeds expectations

Winter rainfall areas in South Africa experienced some good rainfall during the past month. According to Johan vd Berg these areas can expect more rain during July due to a weak El-Nino system, still present in the country.

He indicated that the rainy conditions might even continue up to September. Western Cape, Southern Cape and the southern parts of the Eastern Cape are included in the predictions.

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  • Planting progress in was made in the USA as a result of dryer weather experienced the past week. Wet conditions forecasted for the next ten days could affect the already planted crops negatively as well as the yield.
  • Local yellow maize is priced competitively with rest of the market as its currently trading at Cape import parity. This will limit upward price movement potential since it will be cheaper for SA consumers to import maize should the maize price move above the import parity.
  • The recent USDA report surprised everyone on the market and exceeded expectations for the amount of acres planted for maize.

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.

Benefits:

  • 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.

Disadvantage:

  • 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.