The South African maize future prices traded mixed this week; the soya bean spot price decreased marginally by 0.2% and the sunflower seed spot price increased by 0.3% week on week.
Maize market trends
International maize market
US Kansas yellow corn prices decreased by 0.5% week on week. US corn prices were lower due to expectations that the delayed US harvest will advance during the week ending 22 November 2019. The cold weather conditions in the US which caused further delay in harvesting coupled with concerns that the freezing conditions in the US corn belt may cause significant corn crop losses is expected to provide some support to prices preventing further declines.
Local maize market
South African maize future prices traded mixed this week. The spot price of white maize increased marginally by 0.3% and yellow maize spot price decreased by 0.8% week on week. The Eastern Free-State, Limpopo, KZN and Mpumalanga regions received some rainfall over the past two weeks. Producers started planting at full steam, follow-up rains will be critical to ensure that expected yields materialize. Ermelo region experienced hail which damaged some maize and soybean crops. Parts of the eastern Free State have received some rains, the optimal planting time for this region is from the mid to end of November. According to weather forecasts, rains are expected for the next two weeks, which will be beneficial for crop development and soil moisture.
The US corn prices are expected to remain stagnant due to long-term trends indicating that yield increases will make-up for the lower planting area while the demand for US corn remains relatively flat. Locally, rains remain critical in the eastern, central to western summer crop growing regions. Prices are expected to trade sideways for the next two weeks.
Wheat market trends
International wheat market
Local wheat market
Prices in the domestic wheat market traded negatively this week. The wheat spot price decreased marginally by 0.3% week on week. The expected commercial wheat crop is estimated at 1,695,470 tons down by 6.1% from the previous forecast of 1,806,170 tonnes. Wheat production in the Western Cape, which makes up 40% of total South African wheat production, was estimated at 682,500 tonnes in October by the Crop Estimates Committee. The estimated wheat production may not materialize due the hot and dry conditions experienced in the dryland producing areas of the Western Cape. The harvesting process in the Southern Cape is complete and wheat yields were poor in some areas. Harvesting in the Swartland region will be completed in the next two weeks, and so far, yields are lower, therefore a smaller crop is to be expected from that region. The Northern Cape province which produces 7% of the country’s wheat had a hail occurrence a few weeks ago which caused some damage to wheat crops. The condition of the wheat crop produced under dryland in the Free State is also worrying.
The US wheat prices remain capped by abundant global supplies and renewed competition from Russia and the Ukraine. The US/China trade war and ASF outbreak do not have a major impact on the US wheat and corn outlooks. However, the abundant US wheat supplies, flat domestic use, slow export growth and increased global trade competition, keeps a lid on prices. Locally, wheat prices are expected to recover from November onwards and follow international wheat prices. The grades of the local wheat are good despite the dry conditions (especially in the Western Cape). Because SA is a net importer, the potential smaller wheat crop will not influence local wheat prices. Instead local producers may get a premium on quality.
Soya bean market trends
International soya bean market
The prices of oilseeds in the US traded mixed this week. The price of soya beans in the US gulf decreased by 1.1%, the price of soya oil decreased by 2.5% while the price of soya meal increased marginally by 0.2% week on week. Soya bean prices declined this week on the US futures market and in the EU. Hope is shrinking that the US and China will be reaching an agreement soon, this coupled with the improved soya bean planting progress in South America added price pressure to the soybean market. The price of sunflower seed increased this week in parts of Europe and the Black Sea region underpinned by strong demand and tight supplies in the EU. The sunflower oil prices (FOB Black Sea) declined this week due to large crops harvested in the Ukraine and Russia weighing down on prices.
Local soya bean and sunflower seed market
There’s been a slight improvement in the crushing margin compared to the sharp declines seen a month ago, however the crushing margin remains negative. Year on year crushing margins are lower by 298.7%. Crushers remain under pressure. The soya bean spot price decreased marginally by 0.2% and the sunflower seed spot price increased by 0.3% week on week. The Eastern Free-State, Limpopo, KZN and Mpumalanga regions received some rainfall the past two weeks. Producers started planting at full steam, follow-up rains will be critical to ensure that expected yields materialise.
The ongoing trade war between the US and China will continue to have an impact on US soya bean prices in the short to medium term. Even if an agreement is reached, the demand for US soybeans is expected to lag due to the effects of the ASF outbreak on the China pig herd. The sow herd rebuilding process in Southeast Asia and China could be slow and limited, therefore capping the import demand for US soya beans. The local oilseed prices are following the international oilseed prices. Prices are expected to increase from November onwards according to seasonal trends.