Moody’s Investor Services kept the country’s credit rating at investment grade on 23 March 2018. Moody’s also upgraded the country’s credit outlook from negative to stable. Annual consumer price inflation was reported at 4% for February 2018, down from 4.4% in January 2018. Based on this, as well as the inflationary outlook, amongst many other factors, the South African Reserve Bank reached a decision to reduce the repo rate by 25 basis points to 6.5%.
In their 2nd Forecast, the Crop Estimates Committee (CEC) revised 2018/19 maize production upwards by 1.6% to 12.42 million tons from the 1st Estimate. South Africa could have high maize carryover stocks of approximately 4 million tons at the end of the 2017/18 season, so there should be ample maize supplies for the 2018/19 marketing year of approximately 16.4 million tons. Soya bean was also revised upwards by 1.5% to a new record of 1.4 million tons.
Sunflower seed was also revised upwards by 2.4% to 749 205 tons. Summer crop commodity prices are expected to remain stable from combinations of favourable growing conditions, high carryover stocks, a firming rand and strong commercial buying interest. The petrol and diesel prices could increase by 72 cents and 65 cents, respectively, on 4 April 2018.
The rand rebounded this week.
This week the rand average dR11 .65/USD, firmer by 2.4%week-on-week (w/w) and by 10% year-on-year (y/y). Therand got a shot in the arm when Moody’s Investor Services kept the country’s foreign and local currency rating unchanged on 23 March 2018. Moody’s also upgraded the country’s outlook from negative to stable.
The oil price showed strong gains this week.
This week, the oil price averaged USD69.66 a barrel, up by USD3.35 w/w and by USD18.08 y/y. Price support came from growing geopolitical tensions between the US and Iran, and ongoing capped production by OPEC. However, high oil prices could be shortlived as they could attract non-OPEC oil supply growth. The petrol and diesel prices could increase by 72 cents and 65 cents, respectively, on 4 April. This comes as the effect of a firming rand could be trumped by higher oil prices and the increase in levies.
The yellow maize price came under pressure this week.
This week’s yellow maize price was: R1 956 a ton, down by 1.7% w/w and by 1.5% y/y. Price weakness was mainly from a stronger rand, lower Chicago maize prices; and favourable local growing conditions. The outlook is expected to remain subdued as the CEC revised 2018/19 total maize production upwards by 1.6% to 12.42 million tons. Week 12 total maize exports came to: 29 107 tons, only 12% was yellow maize. This brings 2017/18 cumulative maize exports to 2.1 million tons; 88% of the seasons export forecast of 2.4 million tons.
The white maize price also trended lower.
This week’s white maize price: R1 879 a ton, down by 1.8% w/w and by 1.7% y/y.
The underlying wheat market sentiment remains bearish.
This week’s wheat price: R3 772 a ton, down by 1% w/w and by 8% y/y. Prices were pressured by a stronger rand and lower Chicago prices. The wheat price could remain pressured by ample global supplies. Domestic wheat imports: in week 12 there were no imports. In week 11, 30 635 tons were imported from Latvia. Cumulative 2017/18 wheat imports: 1.2 million tons; 63% of the forecast seasonal imports of 1.9 million tons.
The soya bean price weakened this week.
This week’s soya bean price: R4 447 a ton, down by 2.4% w/w and by 8% y/y. Weekly price weakness was from a stronger rand; favourable growing conditions and lower Chicago prices. A positive outlook for the rand and record 2018/19 production, along with good crush demand could keep prices stable. The CEC revised soya bean production upwards by 1.5% to a new record of 1.4 million tons.
The sunflower seed market was much softer.
This week’s sunflower seed price: R4 710 a ton, down by 5% w/w but up by 7% y/y. Weekly price pressure was from a firmer rand and improving growing conditions. Prices could remain stable as light showers are forecast over the growing areas over the next two weeks. The CEC revised sunflower seed production upwards by 2.4% to 749 205 tons.
Automobile Association of South Africa
Department of Agriculture Forestry and Fisheries
Grain South Africa
International Grain Council
South African Grain Information Service
Standard Bank Group Knowledge Centre
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