Local prices: All but soya move upwards – South Africa

There has been a shift from corn to soybean planting, which has resulted in a reduction in the corn production of the US. The local maize market experienced positive movements this week.  Weather forecasts show that temperatures in the first months of winter will be higher than normally experienced, which will reduce the risk of frost damage for maize planted after December last year.

Wheat: The US wheat prices traded lower compared to last week with wheat shipments behind the USDA’s forecast. The domestic wheat spot price increased by 1% since last week and is 16.8% higher than prices received a year ago. The new wheat tariff has not yet been published. The international market does not have a positive outlook while the domestic market is expected to continue its upward trend for the next three months

Soybeans: The US soya market traded negatively week-on-week. Delayed corn plantings are lending towards a shift in plantings to soybeans. This could result in additional pressure on the US soybean prices as there is already a global oversupply. South Africa’s soy meal imports have declined by roughly two thirds in Jan/March 2019, this is due to an increase in domestic production.

The US yellow corn prices increased by 4.3% week-on-week. Due to the severe rainfall conditions in the US; corn plantings are being delayed due to wet fields. This is lending towards a shift in plantings from corn to soybeans thereby resulting in a reduction in the corn production of the US. This appears to be having a positive impact on prices as the supply of US corn declines, however, there is still the large South American crop to consider which will limit the upward movement of US corn prices. The Kansas white corn premium declined by 20.7% week-on-week however, it has increased by 262.7% since a year ago which the premium was US$1.08/ton.

The local maize market experienced positive movements this week. Spot prices traded upwards with white maize prices increasing by 0.87% and yellow maize prices increasing by 1% compared to last week. Compared to last year, the white maize price is 22.7% higher and the yellow maize price is 14.8% higher. Weather forecasts show that temperatures in the first months of winter will be higher than normally experienced, this will reduce the risk of frost damage for maize planted after December last year.

Prices of domestic maize are expected to remain fairly stable in the next month and then prices are expected to begin increasing from mid-June moving into July. International markets are expecting reduced yields at year-end due to the wet weather currently delaying planting, the market is hopefully that the reduced supply will help support international prices slightly amidst the large South American corn crop coming in.

The US price Soft Red and Hard Red wheat declined week-on-week with soft red wheat prices dropping by 1.7% and hard red wheat prices dropping by 3.2%. The US wheat shipments are currently behind the USDA’s forecast. The USDA’s next crop report is being released this week and traders are hopeful it will provide the market with a boost.

The domestic wheat spot price increased by 1% since last week and is 16.8% higher than prices received a year ago. The new wheat tariff has not yet been published, it is expected that the tariff will be published within the next two weeks following its trigger on the 12th of March. Old season wheat (May 19) and new season wheat (Dec19) moved similarly this week with old season increasing by 0.3% and new season increasing by 0.4% week-on week. The USA import parity declined by 2% compared to last week, this is a 6.3% decline compared to last year.

Domestic and international markets are expected to continue moving in opposite directions. The international market does not have a positive outlook with prices expected to continue moving downwards. The domestic market is expected to continue its upward trend for the next three months, from the beginning of June the rate of increase may decline slightly but prices will continue to increase.

The US soya market traded negatively week-on-week with soybean prices declining by 1.78%, soya oil prices declining by 1.9% and soya meal prices declining by 2.3%. Soya meal prices have declined by 25.5% compared to a year ago. The severe rainfall conditions in the US are delaying the plantings of corn which is lending towards a shift in plantings from corn to soybeans. This could result in additional pressure on the soybean prices as there is already a global oversupply. The number of exports of crude soya oil leaving Brazil has declined by approximately 40% due to increased domestic use for biodiesel. A breakthrough to the US/China trade negotiations is only expected in June during the Chinese president’s visit Washington DC.

Domestic oilseed prices experienced slight declines this week with soybean spot prices declining by 0.8% and the sunflower seed spot price declining by 0.3% week-on-week. The crushing margin after tax has declined by 68.4% since a year ago. South Africa’s soy meal imports have declined by roughly two thirds in Jan/March 2019, this is due to an increase in domestic production.

Domestic soybean prices are expected to decline until the end of May and are then expected to begin increasing from June onwards. Due to the large global stocks, prices may not increase to the expected level. Internationally, soybean prices are expected to continue their decline. Following the weather conditions delaying corn plantings, some producers may switch to soybeans, however, others may consider whether the prevented planting payment will offer a better return than soybeans at their current low prices.

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