The planting progress is at a record low this year with the forecasted wet conditions expected to further delay plantings. The last day for optimal planting in the US is the 1st of June, if the wet weather has stopped by then it is expected that planting will continue past this date however, the yield potential for corn will be lower.
The domestic maize market traded positively this week with yellow maize spot prices increasing by 4.4% and white maize spot prices increasing by 3.4% week-on-week. White maize prices are up by 24.2% year-on-year and yellow maize prices have increased by 16.7% year-on-year. The international prices are lending support to local prices which local producers could take advantage of to secure a higher price.
The domestic maize market traded positively this week with yellow maize spot prices increasing by 4.4% and white maize spot prices increasing by 3.4% week-on-week.
Wheat: The US wheat market experienced sharp price increases this week with Hard Red Wheat increasing by 6.9% and Soft Red Wheat increasing by 7.0% week-on-week. Following the wet weather conditions in the US resulting in flooding there is concern that the supplies of milling wheat and soft red wheat will drop. South African wheat spot price moved downwards this week with the spot price 1.6% lower than last week. There gross margin of wheat has increased from 2018 to 2019 indicating that profit made by wheat farmers has improved since 2018.
Soybeans: US soybean prices increased slightly week-on-week. Trump has pledged to give $16 billion in aid to US farmers as they have been in the frontline to the ongoing US/China trade war which is not expected to reach a conclusion in the short term. The market is slightly hopeful that the price increase signals a shift in the market to the upside, however the market remains highly volatile. The domestic oilseed market traded upwards this week with the soybean spot price increasing by 1.8% and the sunflower seed spot price increasing by 0.9% week-on-week.
Fibre: The Australian wool price declined by 1.6% week-on-week. The number of bales on offer at this week’s sales amounted to 24,121 bales of which 71.75% were sold. The SA wool market is optimistic that the Chinese export market will be fully reopened to South African wool in the short term which will provide support and allow prices to recover. Currently only processed wool may be exported. The Cotton A Index remained fairly stable this week with a slight decrease of 0.8% compared to last week. The USDA crop progress report indicates that cotton planting this year is fairly on par to last year. The South African cotton price also remained fairly stable this week with a marginal increase in price of 0.3% compared to last week
The US corn market appears to be moving on an upswing now and as more wet weather is forecast for the next seven days. This is expected to continue to provide support to the market and further boost prices. There expectations that the US corn price may reach a new high. The domestic maize market is expected to remain on an upward trend with continued support from international prices.
The US wheat market experienced sharp price increases this week with Hard Red Wheat increasing by 6.9% and Soft Red Wheat increasing by 7.0% week-on-week. Following the wet weather conditions in the US resulting in flooding there is concern that the supplies of milling wheat and soft red wheat will drop which will provide upward pressure to wheat prices. The prices have increased to the extent that US wheat is currently priced a bit out of competition and as such prices are expected to pull back slightly in the next week but remain high.
South African wheat spot price moved downwards this week with the spot price 1.6% lower than last week. The price of new season (Dec19) wheat decreased by 0.2% while the price of old season (May19) wheat decreased by 0.7% week-on-week. The gross margin of wheat has increased from 2018 to 2019 indicating that profit made by wheat farmers has improved since 2018. The new wheat tariff of R675.10/ton has finally been published after its trigger on the 12th of March. A new tariff of R957.95/ton was triggered on the 14th of May.
The international wheat price is expected to remain high in the coming weeks, it may pull back slightly from the current high prices but it will remain high as uncertainty continues with regards to the weather delaying plantings. Domestic wheat prices are expected to continue their decline in the coming weeks before increasing slightly in June and stabilizing.
US soybean prices increased slightly week-on-week following the pledge from President Trump as well as the announcement by the USDA that old crop stocks will be exported. Trump has pledged to give $16 billion in aid to US farmers as they have been in the frontline to the ongoing US/China trade war which is not expected to reach a conclusion in the short term. The market is slightly hopeful that the price increase signals a shift in the market to the upside, however the market remains highly volatile. Week-on-week the price of US soybeans increased by 0.7%, soya oil increased by 0.4% and soya meal increased by 1%.
The domestic oilseed market traded upwards this week with the soybean spot price increasing by 1.8% and the sunflower seed spot price increasing by 0.9% week-on-week. The crushing margin after tax has increased by 5.4% compared to last week however it is 58.5% lower than the margin received a year ago. The area planted to soybeans has been on an increasing trend as the soybean market in SA become more mature; as SA intends to increasing the crushing of soybeans to soya meal the demand for soybeans is expected to increase which may provide support to prices.
The US soybean market is expected to continue to experience high levels of volatility in the short term with no conclusion to the trade war in sight and the wet weather conditions. The Argentina soybean harvest progress is ahead of last year and the large crop will be competition to the US market. The local soybean market is expected to follow an upward trend with increasing prices in the next three months.
Australia: The Australian wool price declined by 1.6% week-on-week. The number of bales on offer at this week’s sales amounted to 24,121 bales of which 71.75% were sold. Approximately 66% of the bales offered were of a good style. Buyers made purchases cautiously as they sought to gauge the direction of the Australian wool market.
The Australian wool price is expected to increase in the next month and then decline from June/July which is in line with seasonal trends. The South African wool price is expected to remain fairly stable in the next month and then decline from July which is in line with seasonal trends. The SA wool market is optimistic that the Chinese export market will be fully reopened to South African wool in the short term which will provide support and allow prices to recover. Currently only processed wool may be exported.
Local: There was no wool auction in South Africa for the week ending 24 May. The next sale is scheduled for 29th of May 2019. The wool price is expected to experience some pressure following the Australian wool price decline. The OIE is meeting in Paris this week and the market is hopeful that the feedback form this meeting will provide direction of the SA wool market. Currently only processed wool is able to leave the country with greasy wool exports still prevented. Progress has been made in the past few days with the DAFF certification of greasy wool. The market is feeling optimistic that a solution could be reached in the shorter term allowing the SA wool export market to reopen fully.
USA: The Cotton A Index remained fairly stable this week with a slight decrease of 0.8% compared to last week. The 12,871 bales on offer this week was 10,966 bales more than the 1,905 bales offered last week. Spot trading of cotton was inactive this week with light supply and demand. Reports indicate that most mills in the US have covered their raw cotton needs for the fourth quarter of 2019. The USDA crop progress report indicates that cotton planting this year is fairly on par to last year. To date approximately 44% of the total cotton crop has been planted, this is in comparison to last year when 50% had been planted by this time.
Local: The South African cotton price also remained fairly stable this week with a marginal increase in price of 0.3% compared to last week. In comparison to cotton A index the SA cotton price experience a similar decline month-on-month of approximately 11% which is in line with the cotton A index, however, year-on-year the SA cotton price declined by a smaller percentage than the cotton A index. The cotton price is expected to remain stable in the next three months.
The Australian wool price is expected to increase in the next month and then decline from June/July which is in line with seasonal trends. The South African wool price is expected to remain fairly stable in the next month and then decline from July which is in line with seasonal trends. The SA wool market is optimistic that the Chinese export market will be fully reopened to South African wool in the short term which will provide support and allow prices to recover. Currently only processed wool may be exported.
