Weekly update on Grains, Sugar & Oilseed markets:
- Weakness in the domestic maize market continued as the rand found traction and the favourable production conditions paved way for a bumper crop for the 2016/17 season. This saw the average weekly yellow maize prices falling 2% w/w and 40% y/y at R1,989/ ton, which is below the R2,000/t level. There were no imports of maize for the new marketing season as the harvest outlook shows a return to a surplus. Total maize exports reached 13,168 tons with white maize accounting for 62% at 8,214 tons. Main destinations were Botswana (22%), Lesotho (10%), Mozambique (11%), Namibia (21%), Swaziland (8%), and Zimbabwe (29%). Exports for the week ended 12 May 2017 were pegged at 4,954 tons, all to the neighbouring countries.
- Wheat prices eased marginally lower last week largely due to a weaker rand. At R4,414/t, the average weekly price remains below last year by 10%. In the latest update on wheat, the CEC pegged the final production at 1.9m tons which is 33% higher y/y. This is largely due to the increased planted area and better production conditions in the growing areas. In this week’s trade, prices rebounded modestly due to concerns over the deteriorating production conditions in the producing areas of the Western Cape. Weekly import update from SAGIS showed no records for the week ended 12 May 2017. Nonetheless, exports continued despite SA being a net importer of wheat. Weekly wheat exports increased sharply to 6,364 tons with the year-to-date reaching 71,091 tons. Most of the exports are destined for the neighbouring countries with Zimbabwe so far accounting for 30% of the total, followed closely by Lesotho (23%), Zambia (18%), Namibia (9%), Botswana (14%), Mozambique (4%), and Swaziland (2%).
- There was a slight reversal in trend on the domestic oilseed market with soybeans leading gains despite a bullish crop outlook. Sunflower was a tad firmer on the back of a tightening supply outlook. Weekly sunflower prices finished last week up 0.9% w/w but still down 29% y/y at R4,647/ ton. Weekly soybean prices gained 1.9% w/w but still down 27% y/y at R4,840/ ton. This week started on a softer note with prices down across the oilseed complex on seasonal harvest pressure and the renewed gains in the rand/ US dollar exchange rate. The currency touched its best level since late April, closing yesterday at R13.24/US$. Sunflower was a bit softer from Friday’s level at R4,692/t, which is however slightly higher than last week’s weekly average. Soybeans were the biggest losers and closed down 1.6% d/d at R4,775/t and below the weekly average.
- The medium to longer term outlook for world sugar indicates bumper crops in the world’s largest sugar producing countries. This together with the weak consumption growth and the subsequent increase in stocks will maintain downward pressure on sugar prices. Locally, the latest update from the South African Cane Growers Association (SACGA), the Recoverable Value (RV) price for the May 2017 was declared at R4,702.60 per ton which is down R52.09/ton month-on-month.
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