WEEKLY MAIZE REPORT 28 NOVEMBER 2018 Unigrain (Pty) Ltd Tel. No. : +27 11 692 4400 Fax. No. : +27 11 412 1183 INTERNATIONAL MARKET Table 1: CME Maize prices and weekly changes (cents/bushel) Currently 21/11/2018 Weekly change Monthly change (c/bu) (c/bu) CME Dec-18 357 362-5 -10 CME Mar-19 368 ¾ 372 ¾ -4-10 ½ US maize prices did come under some pressure with both December and March maize trading lower. On a monthly basis CME December and March are 2.7% lower in the past month. On the technical chart for March CME maize we see that the market broke below the key averages towards the end of November including the 40-day and 100-day. The market sold off further finding some support around $3.68/bushel. A break below this level could see the market targeting $3.60 and the previous lows of around $3.55/bushel. The moving averages remain under pressure but the market is oversold. US maize harvest is mostly complete and there is very little new fundamental news in the market. Market participants await the meeting between the US/China to potentially resolve trade issues. The meeting is scheduled for the end of this week. Looking at the outside markets the dollar posted some more gains in the past week and is trading around 1.1285 to the euro this morning. Crude oil prices remain under pressure with WTI crude finding some support around $50/barrel this which is a level last seen in October 2017. USDA crop progress report The USDA in their weekly crop progress report indicated that 94% of the US maize crop has been harvested which is up from the 90% reported last week. The current harvesting progress is very much in line with the 5-year average seen at 96% harvested this time of the year. 100 90 80 70 60 50 40 30 20 10 0 Figure 1: US maize harvesting progress (% complete) 89 94 95 94 68 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 US and Argentine prices The graph below presents the US and Argentine FOB prices. From the graph below we see that US FOB prices are trading around $160/ton which is 1.4% lower week/week while Argentine FOB prices are trading just above $166/ton which is 2.6% higher week/week. South American maize and soybean price will be driven to a large extent by the weather conditions in the weeks ahead.
18/04/09 18/04/23 18/05/07 18/05/21 18/06/04 18/06/18 18/07/02 18/07/16 18/07/30 18/08/13 18/08/27 18/09/10 18/09/24 18/10/08 18/10/22 18/11/05 18/11/19 210 Figure 2: US and Argentine FOB maize prices 200 190 180 170 160 150 US ARG The weather map below presents the rainfall forecast for South America in the week ahead. From the weather map below we see that drier conditions are expected for large parts of the key growing maize and soybean areas of Argentina in the week ahead. Figure 3: South American rainfall forecast week ahead LOCAL MAIZE MARKET South African maize prices posted some strong gains in the past week with white maize contracts leading the way higher. March white and yellow maize contracts gained 6.3% and 2.5% in the past week while the new crop July white maize gained 6.9% in the past week. South African maize prices by far outperformed the US markets in the past week with the weather conditions in our market supporting prices hence white maize gaining more than yellow maize. On the technical chart for March Safex white maize we see that the market did get some support at R2340 and prices surged higher after that breaking above the 100-day and 40-day averages with the short term averages and indicators pulling higher. Resistance is seen at the gap R2533 and the R2635-R2650 highs seen earlier (early September and mid-november). 2
18/03/01 18/03/15 18/03/29 18/04/12 18/04/26 18/05/10 18/05/24 18/06/07 18/06/21 18/07/05 18/07/19 18/08/02 18/08/16 18/08/30 18/09/13 18/09/27 18/10/11 18/10/25 18/11/08 18/11/22 7.00 Figure 4: Safex WM and YM CME and rand/$ (% change) 6.33 6.97 5.00 3.00 2.53 1.00-1.00-3.00-1.38-1.07 0.36 Dec CME Mar CME Rand/$ Safex Mar WM Safex Mar YM Safex Jul WM In dollar terms South African maize prices also posted some gains in the past week with December white maize trading at $174 (+4.4% week/week) while December yellow maize is trading around $169 (+0.75% week/week). 195 190 185 180 175 170 165 160 155 150 Figure 5: Safex December white and yellow maize ($/ton) Dec WM Dec YM South African maize exports The weekly South African maize exports for the week ending the 16 th of November indicated that 13 698 tons of maize was exported in the past week including 8 828 tons of white maize and 4 870 tons of yellow maize. This brings the cumulative maize exports for the season to date at 1.595 million tons including 251 004 tons of white maize and 1.344 million tons of yellow maize. The maize intended for exports for the 8-weeks ahead through to the 11 th of January point to exports of 146 165 tons including 66 453 tons of white maize and 79 712 tons of yellow maize. 3
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 29-05 May 20-26 May 10-16 Jun 01-07 Jul 22-28 Jul 12-18 Aug 02-08 Sep 23-29 Sep 14-20 Oct 04-10 Nov 25-01 Dec 16-22 Dec 06-12 Jan 27-02 Feb 17-23 Feb 10-16 Mar 31-06 Apr 21-27 Apr 12-18 May 02-08 Jun 23-29 Jun 14-20 Jul 04-10 Aug 25-31 Aug 15-21 Sep 06-12 Oct 27-02 Nov 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 Figure 6: Weekly South African white and yellow maize exports White maize Yellow miaze Sagis monthly data The Sagis monthly data was released earlier this week. On the supply side of the South African maize market we see that 197 151 tons of maize was delivered in October 2018 including 110 026 tons of white maize and 87 125 tons of yellow maize. On the demand side of the South African maize market we see that 942 365 tons of total maize was processed for the local market which is up from the 875 736 tons seen in the previous month. This brings the cumulative total maize processed for the local market in the season to date at 5.381 million tons which is 3.5% higher year/year. The maize processed for the local market in October 2018 was well above the quantity processed this time of the year in the past few seasons. The October 2018 maize processed was the largest monthly total on record. Figure 7: Total maize processed for local market (000 ton) 1000 950 900 850 800 750 700 650 600 550 500 15/16 16/17 17/18 18/19 The yellow maize used for feed in October 2018 was reported at 287 270 tons which is up from the 265 354 tons seen in the previous month. The yellow maize used as animal feed could increase in the months ahead with white maize once again at a premium compared to yellow maize. 4
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 500 450 400 350 300 250 200 150 100 50 0 Figure 8: Monthly feed usage of yellow maize May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 15/16 16/17 17/18 18/19 The white maize used for human consumption in October 2018 was reported at 413 237 tons which is up from the 373 495 tons seen in the previous month. The cumulative white maize used for human consumption in the season to date is seen at 2.372 million tons (+4.9% year/year). The white maize used for animal feed in October 2018 was reported at 192 334 tons which is up from the 182 776 tons seen in the previous month. The white maize used as feed in October 2018 was the 2 nd largest monthly total in the season to date. 250 Figure 9: Monthly usage of WM in animal/industrial sector 200 150 100 50 0 17/18 18/19 The South African white maize stocks at the end of October 2018 were reported at 4.763 million tons which is down from the 5.802 million tons seen the same time last year. The average monthly demand (local demand excluding exports) is seen at 585 000 tons and based on this the stock at the end of October should be enough for 8.1 months of consumption. Total exports averaged around 45 000 tons/month boosting total demand to 630 000 tons/month and the stocks at the end of October should be enough for 7.5 months of consumption. The yellow maize stocks at the end of October 2018 were reported at 3.197 million tons which is down from the 3.392 million tons seen the same time last year. The average local yellow maize consumption in the season to date (excluding exports) is seen at 335 000 tons and the stocks at the end of October 2018 should be enough for 9.5 months of consumption. However yellow maize exports in the season to date averaged more than 230 000 tons. But looking at the intended maize exports the yellow maize exports should slow significantly in the 2 nd half of the marketing season. 5
Weather forecast The weather conditions have been the major supportive factor for our market in the past week. We did see some rainfall in the eastern growing areas while isolated areas in the Free State also received some rainfall. However the forecast for the week ahead expects mostly dry conditions going into early December. Figure 10: Cumulative rainfall forecast week ahead FOCUS FOR THE WEEK US maize prices ended slightly lower in the past week with a lack of new fundamental news in the market. The harvesting of maize in the US is mostly complete. Market will look towards the US/China meeting due later this week and a possibility to resolve some of the current trade issues. The weather forecast in South America will become more important. At this stage some drier conditions are expected in Argentina in the week ahead. South African maize prices posted strong gains in the past week with white maize and the new crop contracts leading the way higher. The weather conditions are the major driver of our market. The weather forecast at this stage expects mostly dry conditions in the 5-7 days ahead especially in the central and western parts of the country. On the technical chart for March we see that the market broke above the key averages including the 100-day and 40-day. Resistance is seen at R2533 and the R2635-R2650 area. Also see the technical graphs below Safex Mar-17 white maize prices CME Mar-17 corn prices 6
Daily MAWH9 Cndl, MAWH9, Trade Price 2018/11/28, 2 480.60, 2 526.20, 2 479.80, 2 518.00, +54.00, (+2.19%) SMA, MAWH9, Trade Price(Last), 100 2018/11/28, 2 421.55 SMA, MAWH9, Trade Price(Last), 40 2018/11/28, 2 468.33 SMA, MAWH9, Trade Price(Last), 9 2018/11/28, 2 413.00 SMA, MAWH9, Trade Price(Last), 200 2018/11/28, 2 311.82 2018/03/07-2018/12/12 (JHB) Price ZAR T 2 600 2 580 2 560 2 540 2 520 2 500 2 480 2 460 2 440 2 420 2 400 2 380 2 360 2 340 Auto RSI, MAWH9, Trade Price(Last), 14, Wilder Smoothing 2018/11/28, 56.963 Value ZAR T 60 2 320 2 300 2 280 2 260 2 240 2 220 2 200 2 180 2 160 2 140 2 120 2 100 2 080 40 20 12 19 26 03 09 16 23 30 07 14 21 28 04 11 18 25 02 09 16 23 30 06 13 20 27 03 10 17 25 01 08 15 22 29 05 12 19 26 03 10 March 2018 April 2018 May 2018 June 2018 July 2018 August 2018 September 2018 October 2018 November 2018 Dec 18 Auto 7
Daily CH9 Cndl, CH9, Trade Price, 2018/11/28, 368 1 / 2, 369 1 / 4, 368, 369 1 / 4, +0 3 / 4, (+0.20%), SMA, CH9, Trade Price(Last), 40, 2018/11/28, 378 7 / 8+, SMA, CH9, Trade Price(Last), 9, 2018/11/28, 372+, SMA, CH9, Trade Price(Last), 100, 2018/11/28, 378 3 / 8+ 2017/10/30-2018/12/18 (CHG) Price USc Bsh 432 428 424 420 416 412 408 404 400 396 392 388 384 378 380 7 / 8+ 378 3 / 8+ 376 372+ 369 1 / 4 368 364 360 RSI, CH9, Trade Price(Last), 14, Exponential, 2018/11/28, 28.786 356 1/8 Value USc Bsh 60 30 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 30 07 14 21 29 04 11 18 25 02 09 16 23 30 06 13 20 27 04 10 17 24 01 08 15 22 29 05 12 19 26 03 10 17 Nov 17 Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 Aug 18 Sep 18 Oct 18 Nov 18 Dec 18 40 28.786 20 Auto 8