WEEKLY OILSEED REPORT Unigrain (Pty) Ltd INTERNATIONAL MARKET

Unigrain (Pty) Ltd
WEEKLY OILSEED REPORT
Tel. No. : +27 11 692 4400
Fax. No. : +27 11 412 1183
13 NOVEMBER 2014
INTERNATIONAL MARKET
Table 1: CME Soybean prices and weekly change (cents/bushel)
Weekly change
Currently
06/11/2014
(c/bu)
CME Nov-14
1051 ½
1031
20 ½
CME Mar-15
1059 ¾
1032 ¼
27 ½

Monthly change
(c/bu)
106 ¼
98
From the table above we see that US soybean contracts once again posted some good
gains in the past week with both the nearby and deferred contracts posting some
strong gains. On a monthly basis US soybean contracts are sharply higher with CME
December and March soybeans gaining a massive 11.2% and 10.1% in the past month
respectively.
On the technical chart for November soybeans we see that US soybean contracts did
find some support in the $10.20 area and pushed higher after that. The market pushed
above the 9-day and 100-day averages which attracted some short covering and the
market traded to an intraday high of $10.86 which was its highest level since early
August. The market has since pulled lower once again and the next area of support is
seen at $10.30 and the $10.20/bushel support area.
The extremely tight old crop stocks and the early harvesting delays that were seen
earlier have resulted in some supply issues at soybean processors as well as some
logistical issues which also supported the cash market. In the past week we did see US
soybean and soybean meal prices surge to new recent highs and US soybean exports
remain very strong which is also supporting the US soybean market. Figure 1 below
presents the US soybeans committed for exports this time of the year in the past few
seasons. From the graph below we see that the cumulative commitments in 2014/15 is
high historically and to date the soybeans committed for exports represents 77% of the
USDA export estimate which is well above the 5-year average seen at 66% for this time
of the year.


Figure 1: US soybeans committed for exports
40000
90
35000
80
30000
70
60
25000
50
20000
40
15000
30
10000
20
5000
10
0
0
09/10
10/11
11/12
Soybean commitments
12/13
13/14
14/15
Commitments as % of total exports
The USDA released their weekly crop progress and conditions report after the market closed on
Monday. From the USDA report we did see that:

The USDA in their report indicated that 90% of the US soybean crop has been
harvested which represents a weekly gain of 7%. The current US soybean harvesting
progress is in line with the 5-year average seen at 91% harvested this time of the year.
Figure 2 below presents the US soybean harvesting progress this time of the year in
the past few seasons. From the graph below we see that the 2014 US soybean
harvesting progress is slightly below the 5-year average seen for this time of the year.
Looking at the weather conditions for the US Midwest we see that well below normal
Although everything has been done to ensure the accuracy of the report Unigrain (Pty) Ltd cannot be held responsible for any
losses incurred as a result of the use of the information contained in the report
“Together we make a difference”
temperatures are expected which could delay some of the fieldwork but the harvesting
coming to an end.
Figure 2: US soybean harvesting progress (% complete)
100
90
91
95
94
87
97
96
93
96
91
90
2013
2014
75
80
70
60
50
40
30
20
10
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
The USDA released their monthly supply and demand estimates in their report earlier this
week. From the USDA supply and demand numbers we see that:

The USDA estimated the US 2014 soybean crop at 3.958 billion bushels which was
slightly higher than the October USDA estimate seen at 3.927 billion bushels. The
USDA production estimate was slightly lower than the market expectation seen at
3.967 billion bushels. The USDA in their report left the US soybean area estimate
unchanged and the yield estimate was raised to 47.5 bushels/acre which is up from the
47.1 bushels/acre seen in the report last month. Figure 3 below presents the US
soybean production and yield estimates seen in the past few seasons. From the graph
below we see that US soybean production and yield estimates surged to new record
high in the 2014/15 season.
Figure 3: US soybean production and yield estimates
4 500
50.0
48.0
46.0
44.0
42.0
40.0
38.0
36.0
34.0
32.0
30.0
4 000
3 500
3 000
2 500
Production (bil bu)

14/15
13/14
12/13
11/12
10/11
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
00/01
2 000
Yield (bu/acre) (RHS)
Looking at the demand side of the US soybean market we see that the USDA did raise
their US soybean export estimate by 20 million bushels and the US soybean crush was
also raised by another 10 million bushels. The 2014/15 US soybean ending stocks was
reported at 450 million bushels which was unchanged from the ending stock estimate
seen last month. The market was looking for ending stocks to come in around 442
million bushels. Figure 4 below presents the US soybean ending stocks and stock too
usage ratio seen in the past few seasons. From the graph below we see that the US
2014/15 soybean ending stocks is currently estimated at its highest level since the
Although everything has been done to ensure the accuracy of the report Unigrain (Pty) Ltd cannot be held responsible for any
losses incurred as a result of the use of the information contained in the report
“Together we make a difference”
2
2006/07 season and the stock to usage ratio is expected at around 12.5% which is also
the highest since the 2006/07 season.
Figure 4: US soybean ending stocks and stock to usage ratio
700
20.0%
600
15.0%
500
400
10.0%
300
200
5.0%
100
Soybean ending stocks (mil bu) (RHS)

14/15
13/14
12/13
11/12
10/11
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
0.0%
00/01
0
Stocks to usage ratio (RHS)
In terms of the rest of the world the USDA estimated the 2014/15 world soybean crop
at 312.06 million tons which is slightly higher than the October USDA estimate seen at
311.20 million tons. Changes to the supply side of the world soybean market was a
largely crop estimate for the US (+900 000 tons) while the South American crop
estimates were left unchanged. The 2014/15 world soybean ending stocks was
estimated at 90.28 million tons which is mostly unchanged from the October estimate.
Figure 5 below presents the world soybean production and ending stocks estimates
seen in the past few seasons. From the graph below we see that the world soybean
production and ending stocks are also forecasted at new record highs in the 2014/15
season.
Figure 5: World soybean production and ending stocks (Million tons)
350
100
90
300
80
70
250
60
200
50
40
150
30
World production
14/15
13/14
12/13
11/12
10/11
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
20
00/01
100
Ending stocks (RHS)
The size of the world soybean crop will obviously depend on the planting and growing
conditions seen in South America in the season ahead. In the past week we did see some
planting delays in Argentina and Brazil which provided some support to US and global soybean
prices. A report released earlier this week indicated that 46% of the Brazilian soybean crop has
been planted which is behind the 59% seen the same time last year and the 5-year average
seen at 61% planted this time of the year. Some of the private forecasters and the Brazilian
government is estimating their soybean crop in the 90-92 million ton region which is lower than
the current USDA estimate seen at 94 million tons. Looking at the weather forecast for the
week ahead we see drier weather conditions in the southern parts of Brazil and the key growing
nd
areas of Argentina which should allow some planting. The 2 week of the forecast expects
some more rainfall in the key areas of Argentina and Brazil.
Although everything has been done to ensure the accuracy of the report Unigrain (Pty) Ltd cannot be held responsible for any
losses incurred as a result of the use of the information contained in the report
“Together we make a difference”
3
Figure 7: South American rainfall forecast
LOCAL OILSEED MARKET
Figure 7 presents the Safex December-14 sunflower and soybean prices. From the graph
below we see that South African sunflower seed and soybean contracts posted some good
gains in the past week with December sunflower seed and soybeans gaining 5.1% and 5.2% in
the past week respectively. South African oilseed contracts were supported by the weaker rand
that was seen in the past week as well as the strong gains seen in US soybeans recently. The
gains in South African new crop oilseed contracts were limited to some extent by the improved
weather conditions seen in the past week.
Figure 7: Safex Dec sunflower seed and soybean prices
Safex Dec Soy
14/11/10
14/10/27
14/10/13
14/09/29
14/09/15
14/09/01
14/08/18
14/08/04
14/07/21
14/07/07
14/06/23
14/06/09
14/05/26
14/05/12
14/04/28
14/04/14
14/03/31
14/03/17
14/03/03
14/02/17
5800
5600
5400
5200
5000
4800
4600
4400
4200
4000
14/02/03
6600
6400
6200
6000
5800
5600
5400
5200
5000
4800
Safex Dec Suns (RHS)
We have mentioned in a previous report that the South African oilseed area in the 2014/15
production season is expected at new record highs with the sunflower seed and soybean area
seen at 1.252 million hectares in total which is 13% higher than the area planted in the 2013/14
production season. The soybean and sunflower seed area estimates is close to a 50/50 split
according to the current CEC estimate and the 2014/15 soybean area seen at 618 000
hectares is at new record highs. Figure 8 below presents the sunflower seed and soybean area
estimates.
Although everything has been done to ensure the accuracy of the report Unigrain (Pty) Ltd cannot be held responsible for any
losses incurred as a result of the use of the information contained in the report
“Together we make a difference”
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Figure 8: South African sunflower seed and soybean area (ha)
1400000
1200000
1000000
800000
600000
400000
200000
Suns
14/15
13/14
12/13
11/12
10/11
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
00/01
0
Soy
With the CEC intentions to plant oilseeds seen in the graph above we take a look at possible
production estimates in the section below. Starting with the South African sunflower seed
market we see that:



In the graph below we based our production estimates on the CEC intentions to plant
seen at 633 600 hectares. The yield estimates include the yield estimates seen in the
previous season, the 3-year and 5-year averages.
Based on this the South African sunflower seed crop in the season ahead could range
between 779 328 tons and 899 712 tons. We did see a good start to the growing
season with some good rainfall amounts.
Also included in the chart the red line is an indication of the total demand for sunflower
seed seen in the 2014/15 marketing season which ends at the end of February 2015.
The total demand is seen around 835 000 tons. Assuming the area estimate will indeed
be planted we see that we 3-year and 5-year average yields could see production
falling below the total demand assuming that the demand remains unchanged year on
year.
Figure 9: South African sunflower produciton estimates
950000
900000
899712
779328
850000
798336
853325
5-yr avg (1.26t/ha)
2014 Crop
800000
750000
700000
650000
600000
550000
500000
450000
Yield last year (1.42t/ha)
3-yr avg (1.23t/ha)
Looking at possible production estimates for the South African soybean market in the season
ahead we see that:

Once again the estimates below are based on the CEC intentions to plant soybeans
estimated at 618 000 hectares. The yield estimates used in the calculations below once
again included the yield estimates seen in the previous season as well as the 3-year
and 5-year averages.
Although everything has been done to ensure the accuracy of the report Unigrain (Pty) Ltd cannot be held responsible for any
losses incurred as a result of the use of the information contained in the report
“Together we make a difference”
5


Based on these yield estimates and the CEC intentions to plant soybeans the new crop
could range between 945 540 tons and 1.112 million tons.
Also included in the chart below (the bold black line) is the consumption estimate seen
for the current season which is seen around 965 000 tons. Based on this consumption
the yield estimates will have to come in above 1.6 tons/ha in order for supply to meet
demand. Keep in mind that we have seen substantial growth in the demand side of
especially soybeans in the past few seasons.
Figure 10: South African soybean production estimates
1200000
1112400
1100000
1001160
1000000
945540
944340
900000
800000
700000
600000
Yield last year
(1.80t/ha)
3-yr avg (1.53t/ha)
5-yr avg (1.62t/ha)
2014 Crop
FOCUS FOR THE WEEK






US soybean contracts has been extremely volatile in the past week with support
coming from the sharply higher US soybean meal prices. The strong cash market and
some logistical issues supported the nearby contracts. However recent talk in the
market of possible soybean meal imports could add some pressure.
On the technical chart the market traded to new 3-month highs earlier this week but US
soybean contracts has since pulled off the highs. Key support is seen in the $10.30
area which is also the 100-day average as well as the $10.20 support areas.
The weather forecast for the US expects well below normal temperatures in the week
ahead which could slow some of the fieldwork but at the soybean harvesting progress
close to the 5-year average and coming to an end.
More important the weather in South America expects drier conditions in Argentina and
the southern parts of Brazil in the week ahead. The drier weather should allow for the
planting of maize and soybeans.
South African oilseed prices posted some strong gains in the past week with the higher
US oilseed contracts and the weaker rand adding some support. The weather
conditions limited some of the gains in the new crop prices.
The weather conditions improved significantly in the past week with some widespread
showers that was seen with some more rainfall forecasted for the week ahead.
Technical graphs

Safex Dec-14 soybean prices

Safex Dec-14 sunflower seed prices
Although everything has been done to ensure the accuracy of the report Unigrain (Pty) Ltd cannot be held responsible for any
losses incurred as a result of the use of the information contained in the report
“Together we make a difference”
6
Daily SOYZ4
2014/01/30 - 2014/11/26 (JHB)
Cndl, SOYZ4, Trade Price
2014/11/12, 5 690.00, 5 690.00, 5 655.00, 5 690.00N/A, N/A
SMA, SOYZ4, Trade Price(Last), 9
2014/11/12, 5 533.00
SMA, SOYZ4, Trade Price(Last), 40
2014/11/12, 5 297.08
SMA, SOYZ4, Trade Price(Last), 100
2014/11/12, 5 327.55
Price
ZAR
T
6 300
6 200
6 100
6 000
5 900
5 800
5 700
5 600
5 500
5 400
5 300
5 200
5 100
5 000
Auto
MACD, SOYZ4, Trade Price(Last), 12, 26, 9, Exponential
2014/11/12, 98.40, 71.08
Value
ZAR
T
Auto
RSI, SOYZ4, Trade Price(Last), 14, Wilder Smoothing
2014/11/12, 68.930
Value
ZAR
T
30
Auto
03
10
17
24
February 2014
03
10
17 24
March 2014
31
07
14 22
April 2014
29 05
12
19
26
May 2014
02
09
17 23
June 2014
30
07
14
21
July 2014
28
04
11
18
25
August 2014
01
08
15
22 29
September 2014
06
13
20
27
October 2014
03
10
17
24
November 2014
“Together we make a difference”
7
Daily SUFZ4
2014/02/20 - 2014/11/26 (JHB)
Cndl, SUFZ4, Trade Price
2014/11/12, 5 085.00, 5 101.00, 5 065.00, 5 090.00N/A, N/A
SMA, SUFZ4, Trade Price(Last), 9
2014/11/12, 4 921.22
SMA, SUFZ4, Trade Price(Last), 40
2014/11/12, 4 725.18
SMA, SUFZ4, Trade Price(Last), 100
2014/11/12, 4 636.76
Price
ZAR
T
5 300
5 200
5 100
5 000
4 900
4 800
4 700
4 600
4 500
4 400
4 300
4 200
Auto
RSI, SUFZ4, Trade Price(Last), 14, Wilder Smoothing
2014/11/12, 70.486
Value
ZAR
T
30
Auto
MACD, SUFZ4, Trade Price(Last), 12, 26, 9, Exponential
2014/11/12, 94.65, 77.66
24
03
Feb 14
10
17 24
March 2014
31
07
14 22
April 2014
29 05
12
19
26
May 2014
02
09
17 23
June 2014
30
07
14
21
July 2014
28
04
11
18
25
August 2014
01
08
15
22 29
September 2014
06
13
20
27
October 2014
03
10
17
24
November 2014
Value
ZAR
T
Auto
“Together we make a difference”
8