International maize market
The US corn market is highly volatile at the moment mainly due to the continued wet weather conditions not expected to end any time soon. Due to the weather the price of US yellow corn moved up by 11.2% week-on-week. The ongoing US/China trade war is expected to continue to put pressure on the market however the bullish impact of the wet weather conditions is overriding the bearish influence of the trade war. The USDA crop progress report indicates that the progress for corn planting is now up to 58% (compared to 90% by the same time last year), the market was hoping to see a progress of at least 65%.
Local maize market
The domestic maize market experienced large price movements this week with an 8% increase in the spot price of yellow maize and an 8.2% increase in the spot price of white maize. This spike in prices is due to support from the large increase in the international prices. The uncertainty in the international markets have provided support for the local market as demand for South African maize increases with the expectation of reduced yields in the US.
Outlook
The international market is expected to continue to experience high levels of volatility as the wet weather continues to provide bullish support to prices and the trade war places bearish pressure on the market. The slow planting progress indicates that there will be definite acreage losses to the market but it is unknown to what extent this will impact overall yields. Domestic maize prices are expected to experience a sharp increase in June with prices expected to remain at these high levels going into August. The volatility in the international market is expected to continue to support local prices.
Wheat market trends
International wheat market
Wheat prices in the US moved positively this week with an increase of 4.9% in the price of Soft Red Winter wheat and a 4.3% increase in the price of Hard Red Winter wheat week-on-week. This price increase is due to the heavy rains and serious flooding conditions occurring in the US. The US does still have a large supply of wheat however their prices have traded so high that they are no longer competitive on the global market. The corn market is currently seen to be driving the movements in the wheat market with wheat prices following the same up/down movements of corn prices.
Local wheat market
The domestic wheat market experience positive price movements this week as the increase in international prices supported local prices. The spot price of wheat increased by 2.2% week-on-week, the current spot price of R4 486/ton is 16% higher than prices received a year ago. The current wheat tariff is R675.10/ton, the tariff that was triggered on the 14th of May amounted to R957.95/ton.
Outlook
The US wheat price needs to decline in order for the US to be competitive on the global market. The volatility in the international corn market is expected to impact the international wheat market as the wheat prices follow the upwards or downwards movement of the corn market. Domestic wheat prices are expected to remain fairly stable with a slight price increase in July. The international prices may continue to provide support to the domestic prices.
Soya bean market trends
International soya bean market
The US soya market moved upwards this week. Soya meal prices experienced the largest price increase of 6.6%, followed by soybeans with a price increase of 5.1% and soya oil with an increase in price of only 1.3% week-on-week. The wet weather conditions in the US may potentially lead to a decline in soya production and therefore may contribute to a declining world soya bean output next season. The Brazil soya bean crop is large and the total world soya bean supplies will be sufficient for this season. The USDA crop progress report indicates that 29% of the soya bean crop for this season has been planted so far, this is in comparison to the 74% progress made by the same time last year.
Local soya bean market
The domestic oilseed market was supported by international prices and also moved upwards this week. The soya bean spot price increased by 5.8% while the sunflower seed spot price increased by 2.3% week-on-week. The derived soybean price increase by 10.5% week-on-week and the calculated crushing margin after tax is 6.6% higher than last week. The current soya bean harvest is less than initially expected and deliveries made have declined which was not expected this early based on historical data.
Outlook
The international market is unsure of what the impact of the wet weather or the US/China trade war will be on the soya market. The market is expected to experience high levels of volatility. Any positive news out of the US is expected to provide support for international prices. Domestic soya bean prices are expected to spike in June into July. This spike is due to the uncertainty in the international market.
Fibre market trends
Wool market
Australia: The Australian wool price increased by 6.1% week-on-week, this spike in price is due to strong demand as buyers competed for the small offering of 28,273 bales. Approximately 91.6% of the bales on offer were sold at the auction.
Local:
The South African wool price was supported by the increase in the Australian wool price and increased by 1.8% compared to the previous sale on the 15th of May. Although the price did increase, as greasy wool is still not certified for export the price did not increase to its full potential. There were 8 986 bales on offer at the auction of which 94.4% were sold. Only a small percentage of the offering consisted of long wools which attracted good competition from buyers and supported prices, shorter wools continue to experience the most pressure.
Cotton market
USA: Cotton trading this week was inactive with light levels of demand and supply. The export demand was relatively good this week. The Cotton A index moved upward by 2.3% this week. The offering this week consisted of 8 237 bales, this is 36% lower than the 12 871 bales offered last week. Cotton planting progress is slightly behind last year's level with 57% of the crop planted so far in comparison to the 61% planted by this time last year.
Local:
South African cotton prices increased by 5.1% week-on-week however current prices are 8% lower than prices received a year ago. Cotton prices are expected to remain fairly stable in the next three months with marginal price movements. According to the International Cotton Advisory Committee, the global demand for cotton is expected to reach a record high of 27.3 million tonnes in the 2019/20 season.
Wool outlook
The Australian wool price is expected to increase in June/July in line with seasonal trends before decreasing in July moving into August. The Australian wool price is expected to provide support for the domestic wool price. The local market is hopeful that the Chinese market for greasy wool will be re-opened soon however there are doubts that this will happen in the short term. The market is expected to experience some volatility as they wait for news on this market re-opening.
