Document 6590007

Market Report
7 November 2014
Important events for next week:
Monday: USDA WASDE Report
Tuesday: US Holiday
INDEX TABLE
CBOT Dec Corn
CBOT Dec Wheat
CBOT Nov Soya
R/$
Brent Crude Spot
Previous day
12pm
3.6825
5.2225
10.1225
11.1272
82.83
Present
day
3.7000
5.1700
10.3425
11.2576
82.31
Change
1.75
-5.25
22.00
0.130
-0.52
CBOT
$/mt
145.66
189.96
380.01
SA $/mt
179.43
324.49
487.49
Implied Parity
Move
R 26.66
R 3.31
R 139.51
INTERNATIONAL MARKETS
CORN/MAIZE
CBOT – Dec ▲1.00c/bu @ 371.25c
Overnights Dec ▼1.25c/bu @ 370.00c
 Corn prices recovered from a lower start to close in positive territory last night on CBOT
 Early pressure was felt from the stronger $, poor weekly US corn exports and lower crude oil
prices while late support came from the rally in the soya complex
 The US$ found support from a weaker euro after the EU Central Bank signalled it was
prepared to undertake more stimulus measures
 Many brokers are cutting their forecasts for the US crop which is helping support prices ahead
of Monday‟s USDA report. Having said that investors still believe the USDA will increase their
estimate from last month but just not at the bumper levels thought of a month ago
 The UN‟s FAO lowered its forecast for world coarse grain production by 5mmt citing weakened
expectations from China‟s maize crop due to damage from dryness earlier in the season
WHEAT
CBOT – Dec ▼4.50c/bu @ 520.25c
Overnights Dec ▼3.00c/bu @ 517.25c
rd
 Wheat prices fell for the 3 consecutive day feeling pressure from weak US export data
 Paris wheat futures closed down 0.4% despite the weaker euro after bird flu was found in
Germany -the 1st time the H5N8 virus has been found in Europe. EU poultry farmers use
mostly wheat in their rations so any major flu outbreak could seriously affect demand
 The EU cleared another 517kmt of soft wheat exports taking the total for the season to
10.4mmt vs. 9.4mmt at the same time last year
SOYA COMPLEX
Soya Beans – Nov ▲10.50c/bu @ 1031.00c
Overnights Nov ▲3.25c/bu @ 1034.25c
Soya Meal - Dec ▲$20.50@ $395.50/short ton; Soya Oil - Dec ▲11c@ 32.72c/lb
 Meal prices once again found strong support from US demand but weekly meal export data
was very weak
 US meal export sales saw net cancellations of 124kmt last week, the worst performance in
7yrs
 There have been rumours of the US importing meal from Brazil to meet local demand


Soya bean prices followed meal higher with added support coming from another week of very
good US exports. Weekly export sales were above expectations at 1.61mmt
Crush margins are improving in China which helping the demand for US beans
SAFEX PREVIOUS DAY MTM
Change
(R)
Open
Interest
Yellow
Maize
Change
(R)
Open
Interest
White Maize
M-T-M
Nov WM
R 1 940
30
493
7
Nov YM
R 1 974
25
135
26
Dec WM
R 1 950
32
12 369
-118
Dec YM
R 1 981
12
7 343
-10
Mar WM
R 1 976
31
12 369
157
Mar YM
R 2 020
26
5 197
-50
May WM
R 1 969
35
239
0
May YM
R 1 990
0
179
0
Jul WM
R 1 987
30
3 003
-49
Jul YM
R 2 010
15
2 860
130
R0
0
-
0
R0
0
-
0
Change
(R)
Open
Interest
Change
(R)
Open
Interest
Change
Sep WM
Change
Sep YM
M-T-M
Change
Corn in
Rands
M-T-M
Dec Crn
R 1 620
26
1 173
-25
Nov Wht
R 3 620
0
7
6
Mar Crn
R 1 705
27
125
0
Dec Wht
R 3 653
-3
12 298
-270
Jul Crn
R 1 807
28
402
48
Mar Wht
R 3 736
0
5 304
39
May Wht
R 3 766
0
546
31
Change
(R)
Open
Interest
Change
Change
Wheat
M-T-M
Change
(R)
Open
Interest
R 4 854
47
48
17
Nov Soya
R 5 426
58
24
-11
Dec Suns
R 4 895
50
5 506
-339
Dec Soya
R 5 488
78
6 531
-41
Mar Suns
R 4 691
35
387
104
Mar Soya
R 5 257
32
1 037
26
May Suns
R 4 231
16
658
106
May Soya
R 4 790
65
2 014
8
Sunflower
M-T-M
Nov Suns
Change
Soya
M-T-M
Yesterday maize prices found support from higher US corn prices. There was some selling
pressure later on as we had closed higher than expected on Wednesday as well as rain forecast
for next week but the market found late support to pull prices off the day‟s lows.
COMMENTARY
Rand: The rand is trading sharply weaker this morning, at 4 week lows, after ratings agency
Moody's downgraded South Africa's credit rating last night, citing poor prospects for medium-term
growth and rising public debt in the continent's most advanced, but ailing economy.
The move came after Finance Minister Nhlanhla Nene said last month falling revenue would lead
to a wider budget deficit for 2014/14 than had been forecast.
Among the main reasons for the downgrade to Baa2 from Baa1 were a weak growth outlook
caused by structural weaknesses, including on-going energy shortages, and rising interest rates,
Moody's said in a statement. "South Africa's structural weaknesses are also a major factor behind
the poor investment climate, which has been exacerbated by the extensive work days lost to
strikes in recent years," it said.
"Growth will also be vulnerable to the expected rise in policy rates as the South African Reserve
Bank gradually normalizes real rates into positive territory." In his medium-term budget on Oct.
22, Nene said the budget deficit for 2014/15 was now seen at 4.1% of GDP. That is slightly larger
than the 4% his predecessor, Pravin Gordhan, forecast in February.
Nene said the economy would only manage growth of 1.4% in 2014, compared with 1.9% last year
and down from the 2.7% predicted in February.
Weak GDP numbers have restricted the central bank to raising interest rates only twice - by a total
75 basis points - at five policy meetings this year, even though CPI inflation breached the top end
of a 3 to 6% target band.
The bank will hold its final meeting for 2014 later this month.
The rand extended losses against the dollar to more than %t after yesterday‟s downgrade,
touching a session low of R11.2750, its weakest since 6th Oct.
Moody's did change South Africa's outlook to stable from negative, saying Pretoria had shown a
commitment to reining in government debt over the medium term.
Responding to the downgrade, the government said it was determined to narrow its budget deficit
and recognised the need to implement measures to boost economic growth. "Government will
continue to make the tough decisions that are necessary to address our challenges," the Treasury
said in a statement.
In June, Standard & Poor's lowered South Africa's rating by a notch to BBB-, saying a prolonged
platinum mining strike, coupled with weak domestic and external demand, was likely to curtail
growth. In the same month, Fitch affirmed its own rating at BBB but changed its outlook to
negative from stable, also citing poor growth prospects and rising public debt. The two agencies
will release their next reviews in December. (Reuters)
Zambia: Zambia is expected to remain a net exporter of maize over the next 10 years with an
average export of around 480kmt annually. This is according to a forecast by the Regional
Network of Agricultural Research Institutes (ReNAPRI). The forecast, unveiled during the first-ever
Regional Network of Agricultural Research Institutes Annual Agricultural Outlook Symposium held
in Lusaka, showed that maize output in the country was also likely to reach 4.3mmt by 2023, from
3.4mmt this year.
The government planned to increase annual maize production to 4mmt next year after increasing
the number of farmers receiving subsidised fertiliser. The regional body said the forecast showed
a steady rise in the area planted, from 1.2mil ha in the 2014/2015 production season to 2.3mil ha
in 2023, which would drive the increase in yields. Zambia recorded the biggest maize harvest in its
history in the 2013/14 production season, amounting to 3.4mmt against the annual national
requirement of about 3mmt. The bumper maize harvest has seen prices of the country‟s staple fall
this year. “The domestic maize price is currently trading around K1, 280 (US$213) per tonne, a
substantial decline from last year‟s price of K1,540 (US$285),” ReNAPRI stated. “The nominal
domestic maize price is however expected to recover from the current low in 2015, rising steadily
to reach K2,300 (US$268 per tonne) by 2023.” And agriculture deputy minister, Luxon Kazabu,
called for increased investments in agriculture in Africa to meet the rising population. “Globally, we
will hit nine billion by 2015 and the challenge that lies before this generation is to produce enough
to feed those nine billion stomachs,” Kazabu said.
He also assured that the Zambian government would continue to place agriculture as a top
priority. “We will also continue as a nation to act responsibly and ensure we sustain the
environment which enables us to grow food,” said Kazabu. Earlier, COMESA secretary general,
Sindiso Ngwenya, said the development of agriculture would help to address many challenges
facing the majority people, especially in sub-Saharan Africa. “Sub-Saharan Africa is characterised
by the highest prevalence of undernourishment; high unemployment; significantly low access to
income and markets,” he said. Ngwenya said there was, therefore, a need to boost agriculture to
address the challenges.
WEATHER
SA:
Sakkie Nigrini – Netfor: Buiten vir die vog wat nog inbeweeg oor die oostelike kusgebiede en
Laeveld nie veel wat gebeur nie. Daar is wel heelwat middel wolke oor die oostelike binneland
ingesluit Gauteng en ten beste kan ek nie meer as „n 10% kans en verspreiding van donderweer
oor die Hoëveld en miskien een of twee storms oor JHB, MAAR DIT IS „N GROOT AS!! Op die
oomblik is daar nie regtig „n stelsel in die bolug om die vog oor Namibië suidwaarts te laat beweeg
nie, oor so „n paar dae is dit moontlik so hou die webtuiste dop soos dinge kan ontwikkel oor die
naweek en vroeg volgende week.
International:
US: The DTN Ag weather forecast calls for short-term harvest delays in the eastern Midwest due
to light rain. Drier and colder conditions are in store during the balance of the next week to 10 days
across the region. This pattern will favor late-stage row-crop harvest while slowing down the
development of winter wheat in the southern Midwest.
South America: In central Brazil, Mato Grosso had lighter rain than forecast during the past 24
hours. The five-day forecast also has less-than-ideal rainfall for the region. This drier trend bears
watching. Longer-range charts, however, remain promising for better rain and coverage.
Moderate to heavy rain is likely in southern Brazil, causing some delays in row crop field work and
wheat harvest. A drier trend is in store through the weekend, offering improved field work
conditions.
Argentina will be mainly dry throughout the five-day period with an improved pattern for corn and
soybean planting following recent heavy rain.
PIVOT POINTS
Intraday Pivot Points
Second Resistance
First Resistance
Pivot
First Support
Second Support
Dec WM
1977
1963
1950
1936
1923
Dec YM
2017
2005
1993
1981
1969
Dec
Corn
1634
1627
1623
1616
1612
Dec
Wheat
3663
3659
3655
3651
3647
Dec
Suns
4941
4921
4891
4871
4841
Dec Soya
5523
5506
5473
5456
5423
CONTACT DETAILS
POINTS
Pretoria
274 Emus Erasmus Ave
Erasmusrand
Pretoria
012 940 8347
John
012 940 8349
cell: 082 456 7434
[email protected]
Juanita
Tel: 012 940 8348
cell: 084 824 0902
[email protected]
P.O. Box 25082
Monument Park, 0105
The information contained in this report has been taken from trade and statistical services and other sources which we believe are reliable. Agcom
(Pty) Ltd does not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinions expressed reflect
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