WEEKLY OILSEED REPORT 22 NOVEMBER 2018 Unigrain (Pty) Ltd Tel. No. : +27 11 692 4400 Fax. No. : +27 11 412 1183 INTERNATIONAL MARKET Table 1: CME Soybean prices and weekly change (cents/bushel) Currently 15/11/2018 Weekly change Monthly change (c/bu) (c/bu) CME Jan-19 883 889-6 10 CME Mar-19 897 902-5 11 US soybean contracts are lower in the past week with both January and March soybeans giving up some ground. On a monthly basis US soybean contracts are trading higher with CME January and March ending 1.14% and 1.24% higher in the past week. On the technical chart for January CME soybeans we see that the market traded lower in the past week with most of the losses seen in the session on the 19 th of November. The market is currently finding some support around the moving averages with the 40- day and -day averages seen in the $8.77-$8.75/bushel area. The moving averages and indicators have very much flattened out. US soybean contracts traded slightly lower in the past week with the market remaining in the $8.70-$8.90 trading range. The market is roughly 6% off the lows seen in mid- September. The market awaits the trade talks between the US and China scheduled for the G20 summit at the end of November. Some kind of progress in the current trade war could be supportive for US soybeans. US soybean market The USDA in their weekly crop progress report indicated that 91% of the US soybean crop has been harvested which is up from the 88% reported last week. The current soybean harvesting progress is slightly behind the 5-year average seen at 96% harvested this time of the year. Figure 1: US soybean harvesting progress (% complete) 90 80 70 60 50 40 20 10 0 95 94 96 89 91 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 US soybean export progress The graph below presents the US soybean export progress seen this time of the year in the past few seasons. From the graph below we see that the cumulative soybean commitments seen in the 2018/19 season is well below the commitments seen this time of the year in the past few seasons. In the 2018/19 marketing season the soybeans committed for exports represents 43% of the USDA soybean export estimate which is well below the 5-year average seen at 66% for this time of the year. The ongoing trade issues between the US and China resulted in soybean exports grinding to a halt. Talks between the 2 parties are due to resume at the end of November at the G20 summit.
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 In the USDA report released on the 8 th of November the USDA also lowered their US soybean export estimate for the 2018/19 marketing season to 1.900 billion bushels which is down from the previous estimate seen at 2.060 billion bushels. 50000 45000 40000 35000 000 25000 20000 15000 00 5000 0 Figure 2: US soybean export progress (0 tons) 13/14 14/15 15/16 16/17 17/18 18/19 80 70 60 50 40 20 10 0 Exports commitments date (0 tons) % of total exports (RHS) USDA crop report The USDA in their report earlier in November estimated the 2018 US soybean crop at 4.600 billion bushels which was down from the October estimate seen at 4.690 billion bushels and lower than the market expectation seen at 4.676 billion bushels. The US soybean crop is based on an average yield of 52.1 bushels/acre which is down from the October estimate seen at 53.1 bushels/acre. Figure 3: US soybean production and yield estimates 5 000 4 500 4 000 3 500 3 000 2 500 2 000 5.5 5.0 4.5 4.0 3.5 3.0 Production (bil bu) Yield (bu/acre) (RHS) In terms of the rest of the world the USDA estimated the 2018/19 world soybean crop at 367.50 million tons which is down form the 369.48 million seen last month. The smaller world soybean crop is due to smaller estimate for Argentine (-1.5 million tons). Some revisions were made to the Chinese grain and oilseed balance sheet and this resulted in higher opening stocks and production for China. This in turn boosted world grain and oilseeds stock estimates. The 2018/19 world soybean ending stocks was estimated at 112.08 million tons which is up from the 110.04 million tons reported last month. 2
Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 400 350 0 250 200 150 Figure 4: World soybean production and ending stocks (mil tons) 120 110 90 80 70 60 50 40 20 World production Ending stocks (RHS) US NOPA soybean crush The US NOPA soybean crush for the month of October was reported at 172.3 million bushels which was higher than the market expectation seen at 170 million bushels and a new record crush estimate. From the data in the graph below we see that the US soybean crush usually spikes in the month of October with more new crop soybeans available. 180 170 160 150 140 1 120 110 90 80 Figure 5: NOPA US soybean crush estimates (mil bu) LOCAL OILSEED MARKET South African oilseed prices ended slightly lower in the past week with December soybean futures giving up 0.1% in the past week while December sunflower seed contracts ended 0.40% lower. South African oilseed prices are being pressured by the stronger rand seen in the past week with the rand once again breaking below R14.00/$ after Safex close on Wednesday. 3
18/02/01 18/02/15 18/03/01 18/03/15 18/03/29 18/04/12 18/04/26 18/05/10 18/05/24 18/06/07 18/06/21 18/07/05 18/07/19 18/08/02 18/08/16 18/08/ 18/09/13 18/09/27 18/10/11 18/10/25 18/11/08 18/02/01 18/02/15 18/03/01 18/03/15 18/03/29 18/04/12 18/04/26 18/05/10 18/05/24 18/06/07 18/06/21 18/07/05 18/07/19 18/08/02 18/08/16 18/08/ 18/09/13 18/09/27 18/10/11 18/10/25 18/11/08 5600 5400 5200 5000 4800 4600 4400 4200 Figure 6: Safex Dec sunflower seed and soybean prices Dec Soy Dec Suns The graph below presents the South African soybean/sunflower seed spread for the December contract in the past few months. From the graph below we see that the spread has been very flat in the past few trading session trading around R570-R580. 800 700 600 500 400 0 200 0 - -200 Figure 7: Safex Dec soybean/sunflower seed spread Supply and demand estimates Table below presents the supply and demand estimates for soybeans in South Africa. In the 2018/19 marketing season our estimates are based on the CEC final crop of 1.551 million tons. Still on the demand side we also included imports of 5 000 tons. The total local soybean demand is estimated at 1.220 million tons. Based on the current demand seen in the Sagis data for September and assuming that the demand will hold at the current levels demand could be as high at 1.295 million tons. Based on all of this the South African soybean ending stocks at the end of February 2019 is seen at 6 835 tons which is new record closing stock level for soybeans in South Africa 4
Table 2: South African soybean situation (Marketing season Mar-Feb) CEC Oct 2015/16 2016/17 2017/18 2018/19 Soybean opening stock 63705 89116 84792 3535 Soybean producer deliveries* 10421 713660 1290218 1515800 Imports 124981 270 27508 5000 Total supply 12816 1073776 1402518 1851335 Soybeans processed for local market 1137000 982239 1071569 1220000 SA Soybean exports 4700 6745 414 500 Ending stocks surplus/(deficit) 89116 84792 3535 6835 Area 6870 502800 573950 787200 Yield 1.52 1.47 2.29 1.77 * Actual producer deliveries lower due to soybeans retained for seed purposes The table below presents the supply and demand estimates for sunflower seed in South Africa. In the current 2018/19 marketing season the estimates are based on the final sunflower seed crop estimate of 858 605 tons. We also included some imports seen in the season to date. On the demand side of the South African sunflower seed market the total demand is estimated at 940 000 tons which is up from the 881 000 tons seen in the previous season. At the current rate of usage the total demand for sunflower seed in the 2018/19 marketing season could be as high as 980 000 tons. With this in mind the South African sunflower seed stocks at the end of February 2019 is estimated at 74 315 tons which is well below the sunflower seed stock levels seen at the end of February 2018. Table 3: South African sunflower seed supply and demand (Marketing season Mar-Feb) CEC Oct 2015/16 2016/17 2017/18 2018/19 Sunflower opening stock 92933 45897 1686 154841 Sunflower seed deliveries 663700 759614 872171 858605 Imports 36064 70643 554 869 Total supply 792697 876154 1035811 1014315 Projected consumption season 746800 7168 880970 940000 Ending stocks surplus/(deficit) 45897 1686 154841 74315 Area 576000 718500 635750 601500 Yield 1.15 1.06 1.37 1.43 FOCUS FOR THE WEEK US soybean contracts traded lower in the past week with the ongoing trade issues between the US and China limiting the exports of US soybeans. The USDA also lowered their US soybean export estimate in their November report. On the technical chart for US soybeans support is seen in the $8.77-$8.75 area with the 40-day and -day averages in that area. The indicators have very much flattened out. All eyes will be on the US/Chine trade talks scheduled for the G20 summit starting on the th of November. South African oilseeds ended unchanged to slightly lower in the past week. The stronger rand has been bearish for local oilseeds with the rand breaking below R14.00/$ in the session yesterday. The weather forecast for the week ahead expects some rainfall from Sunday/Monday into early next week. 5
Technical graphs Safex Dec-18 soybean prices CME Jan-19 soybean prices 6
Daily SOYZ8 Cndl, SOYZ8, Trade Price 2018/11/21, 4 601.00, 4 611.00, 4 590.00, 4 611.00N/A, N/A SMA, SOYZ8, Trade Price(Last), 9 2018/11/21, 4 629.22 SMA, SOYZ8, Trade Price(Last), 40 2018/11/21, 4 632.20 SMA, SOYZ8, Trade Price(Last), 2018/11/21, 4 611.93 2018/03/20-2018/12/04 (JHB) Price ZAR T 4 960 4 920 4 880 4 840 4 800 4 760 4 720 4 680 4 640 4 600 4 560 4 520 4 480 4 440 4 400 4 360 MACD, SOYZ8, Trade Price(Last), 12, 26, 9, Exponential 2018/11/21, -4.71, -4.56 Value ZAR T RSI, SOYZ8, Trade Price(Last), 14, Wilder Smoothing 2018/11/21, 47.753 Value ZAR T -40 26 03 09 16 23 07 14 21 28 04 11 18 25 02 09 16 23 06 13 20 27 03 10 17 25 01 08 15 22 29 05 12 19 26 03 March 2018 April 2018 May 2018 June 2018 July 2018 August 2018 September 2018 October 2018 November 2018 7
Daily SF9 Cndl, SF9, Trade Price 2018/11/21, 882, 889, 876, 883, N/A, N/A SMA, SF9, Trade Price(Last), 2018/11/21, 875 SMA, SF9, Trade Price(Last), 40 2018/11/21, 877 SMA, SF9, Trade Price(Last), 9 2018/11/21, 883 SMA, SF9, Trade Price(Last), 200 2018/11/21, 946 2017/10/24-2018/12/12 (CHG) Price USc Bsh 1 060 1 050 1 040 1 0 1 020 1 010 1 000 990 980 970 960 950 940 9 920 910 900 890 880 870 860 850 840 8 820 RSI, SF9, Trade Price(Last), 14, Wilder Smoothing 2018/11/21, 52.920 Value USc Bsh MACD, SF9, Trade Price(Last), 12, 26, 9, Exponential 2018/11/21, 3, 3 Value USc Bsh 06 13 20 27 04 11 18 26 02 08 16 22 29 05 12 20 26 05 12 19 26 02 09 16 23 07 14 21 29 04 11 18 25 02 09 16 23 06 13 20 27 04 10 17 24 01 08 15 22 29 05 12 19 26 03 10 Oct 17 November 2017 December 2017 January 2018 February 2018 March 2018 April 2018 May 2018 June 2018 July 2018 August 2018 September 2018 October 2018 November 2018 Dec 18 8