Weaker rand boosting agricultural commodity prices

SA agricultural economy entered technical recession in the second quarter of 2018
September 4, 2018
A large share of 2017/18 maize crop has already been delivered to commercial silos
September 6, 2018

Weaker rand boosting agricultural commodity prices

  • Yesterday the SAFEX maize market opened on a fairly quiet note, but saw notable gains towards the end of the session and settled in positive territory. This was driven by the weaker rand against the US dollar, as well as slightly higher Chicago maize prices. This is likely to remain the key theme in today’s session as the currency remains at weaker levels, with Chicago maize prices continuing to provide support.
  • Aside from the aforementioned price movements, the focus today will be on the producer deliveries data which is due for release at midday. In the week of 24 August 2018, maize producer deliveries amounted to 390 905 tonnes, down by 30 percent from the previous week as a large share of the harvest has already been delivered to commercial silos. The yields in most regions generally varied between average and above-average.
  • This placed South Africa’s 2018/19 maize marketing year producer deliveries at 10.3 million tonnes, which equates to 78 percent of the estimated commercial harvest of 13.2 million tonnes. The data that is due for release today is for the week of 31 August 2018.
  • Beyond our borders, while the 2018/19 global maize harvest is expected to increase by a percentage point from last year to 1.06 billion tonnes. The supplies are tight due to an anticipated uptick of maize usage in industrial, feed and food industries. Industrial (mainly ethanol) and feed industries maize usages are set to increase by 3 percent each from the 2017/18 season to 304 million and 641 million tonnes, respectively.
  • The uptick in feed demand from the animal feed industry is partly on the back of lower global wheat production resulting to feed processors aiming to utilise maize as a substitute. As a consequence of this, the 2018/19 global maize stocks are set to decline by 14 percent from the previous season to 256 million tonnes.
  • Elsewhere, the unfavourable weather conditions in parts of the US Midwest in the past couple have negatively affected crop conditions. The most recent data from the USDA shows that on 02 September 2018, about 67 percent of the US maize crop was rated good/excellent, down by a percentage point from last week.

 

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