WEEKLY MAIZE REPORT 06 FEBRUARY 2019 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 27/02/2019 Weekly change Monthly change (c/bu) (c/bu) CME Mar-19 366 363 ¾ 2 ¼ -14 CME Jul-19 384 ¼ 382 ¼ 2-11 ½ US maize prices ended slightly higher in the past week with both March and July gaining some ground. On a monthly basis US maize prices are lower with March and July CME maize giving up 3.7% and 2.9% in the past month respectively. On the technical chart for July CME maize we see than the market initially sold off after the break below the key averages and traded to a low of $3.74/bushel in the session on the 1 st of March. The market has posted some gains after that largely due to some short covering and on the chart there could be some divergence between the RSI and prices which could result in some more short covering. The uncertainty with regard to the US/China trade talks and whether a deal will be reached has limited some of the buying interest in US maize and soybeans. Adding to this we did see a stronger dollar in the past few sessions which is usually a bearish factor for US grains and oilseeds. US export progress The graph below presents the US maize committed for exports this time of the year in the past few season. The 2018/19 maize committed for exports is very much in line with the cumulative commitments seen the same time last year. The 2018/19 US maize committed for exports represents 64% of the USDA maize export estimate which is swell behind the 5-year average seen at 71% for this time of the year. 50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 Figure 1: US maize committed for exports and % of total 14/15 15/16 16/17 17/18 18/19 80 75 70 65 60 55 50 Commitments to date % of total (RHS) US ethanol production The weekly US ethanol production was reported at 1.028 million barrels/day which is up from the 996 000 barrels/day reported in the previous week. The current ethanol production is still slightly off the trend line production seen close 1.050 million barrels. WTI crude oil prices are getting some resistance around $57/barrel and higher prices could boost ethanol production.
90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 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 16/01/01 16/03/01 16/05/01 16/07/01 16/09/01 16/11/01 17/01/01 17/03/01 17/05/01 17/07/01 17/09/01 17/11/01 18/01/01 18/03/01 18/05/01 18/07/01 18/09/01 18/11/01 19/01/01 1150 Figure 2: Weekly US ethanol production (000 barrels) 1100 1050 1000 950 900 850 800 USDA supply and demand estimates The USDA will release their March supply and demand estimates on Friday. The average market expectation of the 2018/19 US maize ending stocks are seen at 1.736 billion bushels which is mostly unchanged from the February estimate seen at 1.735 billion bushels. 2500 Figure 3: US maize ending stocks (million bushels) 2000 1500 1000 500 0 The market will also closely look at the USDA production estimates for South America. The average market expectation for the Argentine maize crop is seen at 45.92 million tons which is slightly lower than the February estimate seen at 46 million tons. The average market expectation of the Brazilian maize crop is seen at 94.66 million tons which is slightly higher than the February estimate seen at 94.5 million tons. US and Argentine prices From the graph below we see that US FOB maize prices did come under some pressure in the past week and is trading around $175/ton which is 4.2% lower week/week while Argentine FOB maize prices are trading around $163/tons which is 1.3% lower week/week. The US/Argentine maize price spread has narrowed quite significantly in the past few sessions. 2
18/04/09 18/04/23 18/05/07 18/05/21 18/06/04 18/06/18 18/07/02 18/07/16 18/07/30 18/08/13 18/08/27 18/09/10 18/09/24 18/10/08 18/10/22 18/11/05 18/11/19 18/12/03 18/12/17 18/12/31 19/01/14 19/01/28 19/02/11 19/02/25 210 Figure 4: US and Argentine FOB maize prices 200 190 180 170 160 150 US ARG South American weather The weather map below presents the cumulative rainfall forecast for the week ahead. From the weather map we see that some widespread showers are expected for most of the key crop growing areas of Argentina and Brazil in the week ahead. Figure 5: South American rainfall forecast week ahead LOCAL MAIZE MARKET South African maize prices traded sharply higher in the past week with white maize leading the way higher. July white maize gain 11.4% in the past week while July yellow maize ended 7.1% higher. South African maize prices were supported by the drier weather conditions seen in most of the summer grain producing areas the past week. The forecast calls for some rainfall in the central parts of the country. US maize prices also posted some gains with July CME gaining 0.50% while we did see a weaker rand in the past few sessions with the rand trading around R14.20/$ currently. 3
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 18/12/06 18/12/20 19/01/03 19/01/17 19/01/31 19/02/14 19/02/28 13.00 11.00 Figure 6: Safex WM and YM CME and rand/$ (% change) 11.43 9.00 7.00 7.05 5.00 3.00 1.94 1.00 0.62 0.52-1.00 Mar CME Jul CME Rand/$ Safex Jul WM Safex Jul YM The graph below presents the South African March white and yellow maize prices in dollar/ton. March white maize is currently trading at $207.7/ton which is 10.6% higher week/week while yellow maize prices are trading around $189.5/tons which is 5.7% higher week/week. 250 240 230 220 210 200 190 180 170 160 150 Figure 7: Safex March white and yellow dollar/t March WM March YM White maize prices outperformed the yellow maize market in the past week resulting in the July wm/ym split opening up even further. The split for July traded close to R400 (white above yellow) in the past week with the rally in white maize driving prices higher. The opening up of the spread is due to the drier weather and the market attempting to protect the white maize stocks given the uncertainty. 4
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 17-23 Nov 8-14 Dec 29-04 Jan 19-25 Jan 09-15 Feb 18/08/01 18/08/15 18/08/29 18/09/12 18/09/26 18/10/10 18/10/24 18/11/07 18/11/21 18/12/05 18/12/19 19/01/02 19/01/16 19/01/30 19/02/13 19/02/27 100 Figure 9: Safex July white/yellow maize spread 0-100 -200-300 -400-500 -600 South African maize exports The weekly South African maize exports for the week ending the 22 nd of February indicated that 27 788 tons of maize was exported in the past week. The maize that was exported included 21 496 tons of white maize and 6.292 tons of yellow maize. Most of the white maize was exported to Italy. This brings the cumulative maize exports for the season to date at 1.899 million tons including 431 963 tons of white maize and 1.467 million tons of yellow maize. The maize intended for exports for the 8-weeks ahead through to the 19 th of April point to exports of 135 675 tons including 102 849 tons of white maize and 32 826 tons of yellow maize. 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 Figure 10: Weekly South African white and yellow maize exports White maize Yellow miaze South African weather The weather forecast for the week ahead expects some rainfall in most of the Free State with the majority of the rainfall forecasted for this coming weekend. Slightly drier conditions are possible in the eastern growing areas and the central and western parts of the North West province. 5
Figure 11: Cumulative rainfall forecast week ahead FOCUS FOR THE WEEK US maize prices ended slightly higher in the past week with some short covering and technical buying that was seen. Uncertainty with regard to the outcome of the US/China trade talks limited some of the gains. Key data for the US market will be the USDA supply and demand estimates due to be released on Friday. South African maize prices posted some strong gains in the past week with July white maize leading the way. The drier weather conditions seen in the past week added support. Some rainfall is forecasted for the central parts of the country this coming weekend. Also see the technical graphs below Safex Jul-19 white maize prices CME Jul-19 corn prices 6
Daily MAWN9 Cndl, MAWN9, Trade Price 2019/03/06, 3 080.00, 3 091.00, 3 040.00, 3 079.80, +16.80, (+0.55%) SMA, MAWN9, Trade Price(Last), 100 2019/03/06, 2 828.64 SMA, MAWN9, Trade Price(Last), 40 2019/03/06, 3 011.02 SMA, MAWN9, Trade Price(Last), 9 2019/03/06, 2 938.76 SMA, MAWN9, Trade Price(Last), 200 2019/03/06, 2 627.07 2018/07/06-2019/03/19 (JHB) Price ZAR T 3 350 3 300 3 250 3 200 2 200 Auto RSI, MAWN9, Trade Price(Last), 14, Wilder Smoothing 2019/03/06, 58.347 Value ZAR T 60 3 150 3 100 3 050 3 000 2 950 2 900 2 850 2 800 2 750 2 700 2 650 2 600 2 550 2 500 2 450 2 400 2 350 2 300 2 250 40 20 09 16 23 30 06 13 20 27 03 10 17 25 01 08 15 22 29 05 12 19 26 03 10 18 24 31 07 14 21 28 04 11 18 25 04 11 18 July 2018 August 2018 September 2018 October 2018 November 2018 December 2018 January 2019 February 2019 March 2019 Auto 7
Daily CN9 Cndl, CN9, Trade Price, 2019/03/06, 384 1 / 2, 385, 384, 384 1 / 4, -0 1 / 4, (-0.07%), SMA, CN9, Trade Price(Last), 40, 2019/03/06, 391 1 / 4+, SMA, CN9, Trade Price(Last), 9, 2019/03/06, 384 1 / 2, SMA, CN9, Trade Price(Last), 100, 2019/03/06, 392 7 / 8+ 2018/03/12-2019/03/25 (CHG) Price USc Bsh 440 436 432 428 424 420 416 412 408 404 400 396 392 7 / 8+ 391 392 1 / 4+ 388 384 1 / 2 384 1 / 4 380 376 372 RSI, CN9, Trade Price(Last), 14, Exponential, 2019/03/06, 43.453 1/8 Value USc Bsh 60 43.453 40 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 24 31 07 14 22 28 04 11 19 25 04 11 18 25 March 2018 April 2018 May 2018 June 2018 July 2018 August 2018 September 2018 October 2018 November 2018 December 2018 January 2019 February 2019 March 2019 20 Auto 8