05 March 2018

Report No. 3 2018

The Crop Estimates Committee forecasts 2018/19 maize production to decline by 27.3% y/y from the record production of 2017/18, to approximately 12.2 million tons. This will be 1.4% higher than the 10-year average maize production of 12.06 million tons. South Africa could also have high carryover stocks of approximately 4.2 million tons of at the end of the 2017/18 season, so maize supplies for the 2018/19 marketing year could reach 16 million tons. Soya bean is forecast slightly up by 4.5% y/y to 1.37 million tons, which will be a new record. Sunflower seed is forecast to decline by 16.3% y/y to 731 505 tons. The final wheat production estimate is revised upwards by 3.3% from the previous estimate, to close at 1.5 million tons.

Summer crop commodity prices are expected to move sideways or lower from combinations of favourable growing conditions, high carryover stocks, a firming rand and strong commercial buying interest. Fall army worm was detected on young sunflower seed in Komatipoort (Mpumalanga), but we expect it to be contained without major damage to the crop. A firming rand could see the petrol price drop by 38 cents and diesel by 47 cents on 7 March.

The rand began its rally following the presidential transition and the well-received State of the Nation Address by the new president two weeks ago. This week the rand averaged R11.55/USD, firmer by 1.2% week-on-week (w/w) and by 11.5% year-on-year (y/y). However, more expected US interest rate hikes, that are supportive of the USD, are expected to pressure the rand.

Oil and Fuel prices

This week, the oil price averaged USD66.91 a barrel, up by USD2.08 w/w and by USD10.72 y/y. Price support came from an unexpected drawdown of crude oil inventories. However, prices could soon come under pressure as the crude oil drawdown is only expected to be transient. A firming rand could see the petrol price drop by 38 cents and diesel by 47 cents on 7 March. If the rand remains stable, international petroleum prices will become the main driver of our fuel prices going forward.

Yellow maize prices

This week’s yellow maize price was: R1 894 a ton, slightly up by 0.6% w/w but down by 22% y/y. Price support came from higher Chicago maize prices; and good commercial buying interest. Prices could be pressured by slightly higher than average new crop production; ample maize stocks; and a firmer rand. Week 8 total maize exports amounted to: 25 786 tons, 63% was yellow maize. Cumulative 2017/18 total maize exports: 2 million tons. This is 87% of the seasons export forecast of 2.3 million tons.

White maize prices

This week’s white maize price: R1 804 a ton, up by 1.3% w/w but down by 30% y/y.

Wheat prices

This week’s wheat price: R3 577 a ton, very slightly down by 0.1% w/w and by 9.4% y/y. Prices were pressured by a stronger rand; lower Chicago prices; and a higher than expected final production estimate. Price support could emanate from good commercial buying interest; and higher Chicago prices. Domestic wheat imports remain high. Week 8 wheat imports: 65 453 tons from Germany (88%), Latvia (9%), and Argentina (3%). Cumulative 2017/18 wheat imports: 992 306 tons, which is 52% of the forecast seasonal imports of 1.9 million tons.

Soya bean prices

This week’s soya bean price: R4 538 a ton, very slightly up by 0.1% w/w but down by 24% y/y. Weekly price support was from higher Chicago prices and good commercial buying interest. However, favourable growing conditions; a recovering rand and new crop production that is expected to set a new record could pressure prices.

Sunflower seed prices

This week’s sunflower seed price: R4 644 a ton, down by 0.3% w/w but up by 1.2% y/y. Weekly price pressure was from a firmer rand; improving growing conditions; and late plantings. Price support could come from good commercial demand; and a new crop that is lower by 16% y/y. The fall army worm that was detected in Komatipoort (Mpumalanga) is expected to be contained without major damage to the crop.

Automobile Association of South Africa
Department of Agriculture Forestry and Fisheries
Grain South Africa
International Grain Council
Oil World
South African Grain Information Service
Standard Bank Group Knowledge Centre

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