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Grain SA's Morning Grain Market Commentary- South Africa

Market Review: There were several factors that contributed to the weakening of the rand. International factors include the strengthening of the dollar, and local factors contributing to the weakening of the rand are the uncertainty about how the pressure will be. Cyril Ramaposa's cabinet will look like. The rand was R14.44 a dollar yesterday, weakening by 26 cents and trading R14.70 this morning against the dollar.

Eskom's 96-year history is full of former chief executives who have risen from the debt-serviced public service to run the company. There are few clear choices for the next CEO to come from the same ranks. Two possible candidates from Eskom's executive team to replace Phakamani Hadebe have strengths but also weak points. Chief Financial Officer Calib Cassim is a chartered accountant who has been working at Eskom for 17 years. However, he has little technical expertise. Chief operating officer Jan Oberholzer, who has had a variety of jobs over a quarter of a century, may not have the financial experience to stabilize his shaky finances. A total of 44.3% of households in South Africa receive at least one social grant of 30.8% in 2003, according to a new report by Stats SA.

The highest percentage of subsidy recipients is in the Eastern Cape, where 59% of households receive at least one grant. Next in line is the Northern Cape at 57.4%, followed by the Free State at 50.7%. The percentage of households related to the country's largest electricity supply grew to 84.7% in 2018, according to the General Household Survey released on Tuesday by Stats SA. This has risen from 76.7% in 2002. However, the report added that the percentage of households with access to main electricity decreased by 9.5 percentage points in Gauteng and by 0.6 percentage points in the Western Cape.

Motorists can expect the petrol price to drop by about 10 cents a liter in June, the Automobile Association predicted on Tuesday, based on unaudited data released by the Central Energy Fund. But the introduction of the carbon tax - which will add nine cents a liter to the petrol price - is likely to cancel the drop.

Maize: The US maize price futures contracted higher on Monday night and never looked back. Yesterday afternoon, the USDA plantation figure was announced and planting at 58% is expected to be 68% plantings and usually the US has been planted 90% far. Farm futures analysis suggests that 35 million tonnes of production is lost, retaining a perfect remnant for the rest of the growing season to drop stock. End
users also start to notice. Export inspections came in at 1,102 million tons last week. While it is about 254,000 tons short of the rate needed each week by August to reach USDA forecast for the 2018 crop, it was a good total lack of supplies moving along the river to the Gulf. Grain base changed little at big terminals yesterday morning, following major shifts last week when tenders from the Ohio River rose south, while
other areas pulled back. Local: According to the latest crop estimate released yesterday, local maize production has been revised upwards from 10 655 360 tons to 10 900 260 tons. TheMarket overview: The rand is trading at R 14.69 this morning against the US dollar. The rand weakened by 4 cents from yesterday's market close. Brent crude is trading at $ 66.36 a barrel this morning.

The record price hike of oil prices following a strike at a Saudi Arabian oil plant could not have come at a worse time for a global economy already in the grip of a divisive downturn. Although its severity depends on how long the price increases last, the development will further erode business and consumer confidence amid the trade dispute between the US and China and the slowdown in global demand. A production slump around the world is hampering growth in export power houses China and Germany. Emerging markets will look to the central banks again to provide the following opportunities in a battle that makes it the best September so far for equities and currencies since 2013. It is assumed that there is no US-China trade confusion, no panic over the slump in Saudi Arabia's oil production, and no signs of slowing global growth more than predicted. The decisions of the Federal Reserve Board and the Bank of Japan on Wednesday and Thursday will be the sentiment, while a series of economic reports from China will also be a major driver. Also, the interest rate decisions in Brazil, South Africa and Indonesia must not be forgotten. Zimbabwe's foreign currency inflows fell by 24% for the six months to June 2019, at a time when the country has to pay for the most important imports of fertilizers and maize into electricity.

According to the latest figures published by the Reserve Bank of Zimbabwe, foreign exchange receipts for the first half of the year fell 24% to $ 2.58 billion, compared to $ 3.40 billion in the same period in 2018. The South African National Roads Agency (Sanral) received a R7bn loan from the National Development Bank following a meeting last week in Shanghai, China. The NDB was established by the economic group Brazil, Russia, India, China and South Africa, Brics, to mobilize resources for infrastructure and sustainable development projects in emerging economies and developing countries. The SA government has provided a guarantee for the loan. Maize: US maize prices moved 1.5% higher on Monday due to technical purchases partly led by a dramatic rise in energy prices yesterday. However, favourable weather forecasts prevented a bigger jump. Maize export inspections fell week-on-week after reaching 421 000 tonnes, compared to the previous week's figure of 612 000 tonnes. Mexico was the number one destination, with 218,000 tons.

The grain crop quality dropped by 3 points last week, and analysts expect USDA to cut the crop another point in this week's progress report later this afternoon. This will put the current maize quality at a good to excellent condition of 54%. In the European Union, maize imports 2019/20 continue at a relatively rapid pace after reaching 4.501 million tonnes on September 15, up 63% year-on-year to date. The analyst APK-Inform has cut its maize production forecasts in Ukraine by 0.8% and still retains a relatively large 33 million tonnes. Maize accounts for almost half of the country's total grain production.

Local: In the local markets, maize performed well yesterday. There were price increases on all contracts traded. White maize is R21 up and closes the day's trading at R2790. Yellow maize is up R22 and closes trading yesterday at R2660. Soybeans:US soybean prices experienced technical purchases thanks to a large sale to China, plus some spillover strength of maize and wheat. Favourable weather forecasts remained in check this week. For the third consecutive session, private exporters reported a large soybean sale to China for delivery during the 2019/20 marketing year, which began September 1, to USDA.

The latest auction is for 255 000 tons. That's on top of 802,000 tonnes announced last Thursday and Friday, as well as 136,000 tonnes of soybeans for delivery to Mexico announced last Tuesday. Soybean export inspections reached 666 000 tonnes for the week ending September 12, which was moderately lower than the previous week's number of 977 000 tonnes. China was the number one destination, with 206,000 tons. Prior to this afternoon's USDA crop progress report, analysts expect the agency to reduce soybean quality by a point on September 15 to 54% in good to excellent condition. The US soybean press for August reached 4.574 million tonnes, surpassing analysts' estimates for two months. Last month's total crushing was up to 4,573 million tonnes in July, and year-on-year results of 4,324 million tonnes were huge, making the biggest record in August. 

Local: Relief was experienced yesterday with good price increases on the soybean contracts that traded. The day price for soybeans is R80 and closes at day's trading at R5740. Wheat: Wheat prices in the US went higher with maize following an attack on some Saudi Arabia's oil facilities with energy futures today that have risen more than 10% and technical purchases have taken place. 

Wheat export inspections performed better than the week-on-week total, with 459 000 tonnes, compared to 413 000 tonnes for the week ending 5 September. Egypt was the number one destination, with 92,000 tons. In anticipation of the USDA crop report this afternoon, analysts expect the agency to see 81% of spring wheat harvest finished this year, up 71% a week ago. Analysts also expect USDA to report 8%
of the now-planted 2019/20 winter wheat crop, with individual estimates ranging from 4% to 15%. European Union wheat exports for 2019/20 are up 34% year-on-year after reaching 5.1 million tonnes in September. EU barley exports also increased 26% over the same period. Analyst APK-Inform cut its wheat harvest forecast by 0.8% for a total estimated production of 27 million tonnes. Australia predicts that the country's wheat exports will decline 7.7% year-on-year and reach 10.799 million tonnes as it continues to struggle with prolonged drought conditions. Algeria has issued an international tender for the purchase of 48,000 tonnes of wheat of optional origin, but often buys significantly more grain than the nominal amount. The deadline is September 17, with grain for shipping beginning in November.

Local: Relief was also experienced yesterday with very good price increases on all contracts traded. Wheat's day price rose by R61 and closed the day's trading at R4620.


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