Categories: NewsPublished On: 1st March 2024

Agri Trends: Grains and Oilseed – SAFEX and CBOT maize prices followed divergent trends

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Maize market trends

International maize market

CBOT corn prices continue to lose momentum, trading near three-year lows underscored by big harvests from South America. As a result, CBOT corn prices decreased by 7,8% compared to a month ago. Contributing to the ample global supplies are record corn stock
levels in the U.S. as farmers delayed sales early in their marketing season in hopes of higher prices fueled by expectations of smaller global harvests. The delayed soybean season in Brazil sparked expectations of a delayed second corn crop, however, improved weather in
this region continues to weigh on prices. CBOT corn prices decreased by 36,7% year-onyear on February 29.

Local maize market

The Crop Estimates Committee (CEC) indicated that yield concerns for the summer crop growing regions were not unjustified. They forecasted a 12,6% decline in maize production for 2023/24, attributed to yield losses induced by heat and sparse rainfall. White maize was forecasted to decline by 17,21% because it is predominantly produced in the Western parts of the country which received below-average rainfall. As a result, white maize is trading at a premium of about R575 per ton to yellow maize. SAFEX white maize increased by 16,5% on February 29 compared to a month ago and SAFEX yellow maize by 10,7% month-on-month.

Outlook

SAFEX maize prices are expected to remain firm over the next few weeks supported by the unfavourable production conditions and the weaker exchange rate. The maize crop is expected at 14,3 million tons as published by the CEC, which is just 500 000 tons shy of the
five-year average but still above the local demand. The past four seasons of bumper harvests and favourable stock levels therefore limit the excessive upside price risks.

Figure 1: Yellow maize prices and price projections

Wheat market trends

International wheat market

CBOT wheat prices also decreased month-on-month by 2,3% and 7,5% for CBOT SRW and CBOT HRW respectively on the back of sluggish U.S. export demand coupled with large global stocks and strong competition from Russia. CBOT SRW decreased by 15,8% year on year while CBOT HRW decreased by 29,5%.

Local wheat market

SAFEX wheat prices increased by 1,5% week-on-week. Prices traded around the R5 979 per ton mark on February 29 and decreased by 2,6% month-on-month. The final wheat production estimate for 2023 came in at 2,07 million tons which are 0,98% lower than the
2022 wheat production.

Outlook

SAFEX wheat prices are expected to trade sideways around the R6000 per ton mark for the coming few weeks.

Figure 2: International and SAFEX wheat price projections
*Section in grey represents Absa AgriBusiness forecasts

Oilseed market trends

International oilseed market

CBOT soybean prices continue to follow a decreasing trend also hovering just above three year lows. Prices decreased by 4,6% month-on-month and by 25,9% year-on-year as cheap supplies from Brazil entered the already sufficiently supplied market. The significant decline
in CBOT soybean prices is attributed to agricultural agencies in the U.S. and Brazil revising their Brazilian soy harvest forecasts by less than anticipated. Furthermore, the U.S. Department of Agriculture’s upward revision of its global supply projection to the highest on
record has exerted additional pressure on prices.

Local oilseed market

SAFEX Soybean prices traded sideways both week on week and month on month. The 2023/24 soybean production season is not immune to the dryer and hotter production conditions. This is supported by the 22,76% forecasted soybean production decline by the CEC. Losses for SAFEX soybean were limited by the buffer provided by the record production of the 2022/23 season and the two previous seasons of bumper harvests.

Outlook

Local SAFEX soybean prices are expected to follow global soybean price declines weighed by ample global and local soybean supplies.

Figure 3: SAFEX oilseed price projections
*Section in grey represents Absa AgriBusiness forecast

Source: ABSA

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