WEEKLY OILSEED REPORT 31 OCTOBER 218 Unigrain (Pty) Ltd Tel. No. : +27 11 692 44 Fax. No. : +27 11 412 1183 INTERNATIONAL MARKET Table 1: CME Soybean prices and weekly change (cents/bushel) Currently 24/1/218 Weekly change Monthly change (c/bu) (c/bu) CME Nov-18 836 85-14 -22 CME Mar-19 861 ¾ 876 ¾ -15-22 ½ US soybean prices traded lower in the past week with both November and March soybeans coming under pressure. On a monthly basis US soybean prices are also trading lower with December and March giving up 2.6% and 2.5% in the past month. On the technical chart for November CME soybeans we see that the market did come under some pressure in the past week with the market breaking below the 4-day average and the $8.4 support area. The moving averages and indicators remain under pressure and support is seen at $8.3 and the previous lows seen at $8.12/bushel. The major bearish factors for US soybeans continue to be the harvesting of a record soybean crop with the harvesting gaining some good momentum in the past week while the ongoing trade war between the US and China resulted in soybean exports to China grinding to a halt also weighing on prices. US soybean market The USDA in their weekly crop progress report indicated that 72% of the US soybean crop has been harvested which is up from the 53% reported last week. The current US soybean harvesting progress is still behind the 5-year average seen at 81% harvested this time of the year. Figure 1: US soybean harvesting progress (% complete) 1 9 8 7 6 5 4 3 2 1 96 76 87 87 87 87 83 77 7 72 44 28 29 21 211 212 213 214 215 216 217 218 The weather forecast for the week ahead expects some heavier rainfall amounts in the eastern parts of the US Midwest which could result in some minor harvesting delays. Less rainfall is forecasted for the central and western parts of the US Midwest and the harvesting could continue at a good pace. The 6-1 day rainfall forecast expects above normal rainfall for most of the Midwest.
Figure 2: Cumulative rainfall forecast for week ahead US soybean export progress The graph below presents the cumulative US soybeans committed for exports this time of the year in the past few seasons. From the graph below we see that the 218/19 US soybeans committed for exports is well below the commitments seen the past few seasons. The soybeans committed for exports in the 218/19 market season represents 38% of the USDA soybean export estimate which is well below the 5-year average seen at 57% for this time of the year. The slow export progress of soybeans is as a result of the ongoing trade issues between the US and China and could result in a lower export estimate in the months ahead. 5 45 4 35 3 25 2 15 1 5 Figure 3: US soybean export progress (1 tons) 13/14 14/15 15/16 16/17 17/18 18/19 8 7 6 5 4 3 2 1 Exports commitments date (1 tons) % of total exports (RHS) The graph below presents the total US soybean exports seen in the past few seasons. From the data in the graph below we see that the 218/19 US soybean exports estimated at 2.6 billion bushels is slightly lower than the soybean exports seen in the past 2 seasons. However the slow progress seen to date could very well result in a downward revision of the US soybean export estimate. 2
18/2/1 18/2/15 18/3/1 18/3/15 18/3/29 18/4/12 18/4/26 18/5/1 18/5/24 18/6/7 18/6/21 18/7/5 18/7/19 18/8/2 18/8/16 18/8/3 18/9/13 18/9/27 18/1/11 18/1/25 Figure 4: US soybean exports ( bushels) 2 1 5 1 5 LOCAL OILSEED MARKET South African oilseeds ended mixed in the past week with December soybeans under some pressure in line with the lower US soybeans with lower December soybeans ending 1.22% lower while sunflower seed contracts gained.56% in the past week. The rand has lost some ground in the past week and is currently trading at R14.64/$ currently. 56 54 52 5 48 46 44 42 Figure 5: Safex Dec sunflower seed and soybean prices Dec Soy Dec Suns The graph below presents the December soybean/sunflower seed spread seen in the past few months. From the data we see that the spread traded as low as R366/ton by mid-october and the spread has since posted some strong gains and is seen at R53/ton currently. The South African soybean market is much heavier on the supply side compared to the sunflower seed market which together with a sharp increase in the intentions to plant soybeans in the season ahead supported the spread. 3
18/2/1 18/2/15 18/3/1 18/3/15 18/3/29 18/4/12 18/4/26 18/5/1 18/5/24 18/6/7 18/6/21 18/7/5 18/7/19 18/8/2 18/8/16 18/8/3 18/9/13 18/9/27 18/1/11 18/1/25 8 7 6 5 4 3 2 1-1 -2 Figure 6: Safex Dec soybean/sunflower seed spread Sagis monthly data South African sunflower seed On the supply side of the South African sunflower seed market we see that 5 235 tons of sunflower seed was delivered in the month of September. This brings the cumulative deliveries seen in the season to date at 853 921 tons, which is still just short of the final crop estimate of 858 65 tons. Sunflower seed imports are seen at 859 tons. The sunflower seed processed for the local market in September 218 was reported at 84 829 tons which is up from the 79 25 tons seen in the previous month. The cumulative sunflower seed processed for the local market in the season to date is seen at 551 536 tons which is 16.8% higher year/year. 12 Figure 7: Sunflower seed processed for local market ( tons) 1 8 6 4 2 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 215/16 216/17 217/18 218/19 The sunflower seed stocks at the end of September 218 was reported at 459 755 tons which is down from the 556 437 tons seen the same time last year. The average monthly sunflower seed demand seen in the season to date is estimated at around 8 tons/month. Based on this the South African sunflower seed stocks at the end of September should be enough for 5.7 months of consumption. 4
South African soybeans On the supply side of the soybean market we see that 1 73 tons of soybeans was delivered in the month of September 218. This brings the cumulative deliveries in the season to date at 1.479 million tons. The final crop estimate was seen at 1.551 million tons. The soybeans processed for the local market in September 218 was reported at 116 589 tons which was well above the 99 58 tons seen in the previous month. The cumulative soybeans processed for the local market in the season to date is seen at 687 45 tons which is 13.9% higher year/year. From the graph below we see that the September 218 soybeans processed for the local market was the largest monthly total in the 218/19 marketing season to date and 4 th largest monthly total on record. 14 Figure 8: Monthly soybean processed for local market ( tons) 12 1 8 6 4 2 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 215/16 216/17 217/18 218/19 The South African soybean stocks at the end of September 218 was reported at 1.122 million tons which is sharply higher than the 766 363 tons of soybean stocks at the end of September 217. The average monthly usage in the season to date is seen at just below 1 tons/month and based on this the stock at the end of September 218 should be enough for 11 months of consumption. If demand should remain at the current levels of 116 tons/month the stocks should be enough for 9.6 months of consumption. CEC new crop area estimates The CEC in their report towards the end of last week estimated the intentions to plant sunflower seed at 575 ha which is 4.4% lower year/year. The intentions to plant soybeans in the season ahead was pegged at 851 8 ha which is 8.2% higher year/year and a new record soybean area. From the data in the graph below we see that the sunflower seed and soybean area combined is estimated at 1.427 million ha which represents 35% of the total summer grain area planted. 5
/1 1/2 2/3 3/4 4/5 5/6 6/7 7/8 8/9 9/1 1/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 16 14 12 1 8 6 4 2 Figure 9: South African sunflower seed and soybean areas planted Sunflower area Soybeans area The graph below presents possible sunflower seed crop estimates based on the new crop area estimate and several yield scenarios. Based on this the South African sunflower seed crop could range between 77 25 tons and 816 5 tons depending on the yield used. Keep in mind that the South African sunflower seed demand in the current season is estimated at around 94 tons and in the previous season total demand was seen at 881 tons. 85 8 75 7 65 6 55 5 Figure 1: South African sunflower produciton estimates 7325 736 7725 8165 45 3-yr avg (1.28t/ha) 5-yr avg (1.27t/ha) 7-yr avg (1.23 t/ha) Last year (1.42 t/ha) The graph below presents several possible soybean crop estimates based on the new crop area intentions and different yields. The yields used in the 218 yield as well as the 3-year, 5-year and 7-year averages. From this we see that the South African new crop soybean crop could range between 1.47 and 1.67 million tons. Keep in mind that the total local soybean demand in the current season was seen at a record of just short of 1.2 million tons. 6
18 16 14 Figure 11: South African soybean production estimates 1626938 1558794 1473614 167846 12 1 8 6 3-yr avg (1.91 t/ha) 5-yr avg (1.83 t/ha) 7-yr avg (1.73 t/ha) Last year (1.97 t/ha) FOCUS FOR THE WEEK US soybean contracts traded lower in the past week with the harvesting of soybeans (record soybean crop) and the ongoing trade war between the US and China negatively impacting exports weighing on prices. On the technical chart for November CME soybeans we see that the market traded lower in the past week breaking below the 4-day average and the $8.3 support level. Next area of support is seen at $8.3 and the previous lows seen at $8.12/bushel. South African oilseeds ended mixed in the past week with December soybeans coming under some pressure while local sunflower seed contracts managed some gains. On the technical chart for December Safex soybeans we see that the market did come under some pressure in the past week breaking below key averages including the 1- day. The moving averages and indicators remain under pressure. Technical graphs Safex Dec-18 soybean prices CME Nov-18 soybean prices 7
Daily SX8 Cndl, SX8, Trade Price 218/1/31, 833, 835, 833, 835, +1, (+.12%) SMA, SX8, Trade Price(Last), 1 218/1/31, 869 SMA, SX8, Trade Price(Last), 4 218/1/31, 851 SMA, SX8, Trade Price(Last), 9 218/1/31, 846 SMA, SX8, Trade Price(Last), 2 218/1/31, 948 218/2/8-218/11/14 (CHG) Price USc Bsh 1 4 1 3 1 2 1 1 1 RSI, SX8, Trade Price(Last), 14, Wilder Smoothing 218/1/31, 39.264 Value USc Bsh MACD, SX8, Trade Price(Last), 12, 26, 9, Exponential 218/1/31, -5, -1 Value USc Bsh 12 2 26 5 12 19 26 2 9 16 23 3 7 14 21 29 4 11 18 25 2 9 16 23 3 6 13 2 27 4 1 17 24 1 8 15 22 29 5 12 February 218 March 218 April 218 May 218 June 218 July 218 August 218 September 218 October 218 Nov 18 99 98 97 96 95 94 93 92 91 9 89 88 87 86 85 84 83 82 3 8
Daily SOYZ8 Cndl, SOYZ8, Trade Price 218/1/3, 4 61., 4 625., 4 596., 4 598.N/A, N/A SMA, SOYZ8, Trade Price(Last), 9 218/1/3, 4 641.56 SMA, SOYZ8, Trade Price(Last), 4 218/1/3, 4 656.33 SMA, SOYZ8, Trade Price(Last), 1 218/1/3, 4 66.71 218/2/26-218/11/12 (JHB) Price ZAR T 5 4 5 4 96 4 92 4 88 4 84 4 8 4 76 4 72 4 68 4 64 4 6 4 56 4 52 4 48 4 44 4 4 4 36 MACD, SOYZ8, Trade Price(Last), 12, 26, 9, Exponential 218/1/3, -7.4, 1.84 Value ZAR T RSI, SOYZ8, Trade Price(Last), 14, Wilder Smoothing 218/1/3, 43.464 Value ZAR T -4 3 26 5 12 19 26 3 9 16 23 3 7 14 21 28 4 11 18 25 2 9 16 23 3 6 13 2 27 3 1 17 25 1 8 15 22 29 5 12 March 218 April 218 May 218 June 218 July 218 August 218 September 218 October 218 Nov 18 9