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G RAI N M AR K E T P R O S P E C T S
April and May 2017:
Market movements
THYS GROBBELAAR
SENIOR GRAIN ANALYST, SENWES GRAINLINK
THE OBJECTIVE OF THIS ARTI-
CLE IS TO PROVIDE A BROAD
MARKET OVERVIEW OF THE
MOST IMPORTANT GRAINS AND
OILSEEDS, SINCE THERE IS A SIG-
NIFICANT TIME LAPSE BETWEEN
THE WRITING AND PUBLICATION
OF THE ARTICLE.
46
Price drivers in the grain
and oilseeds market Graph 1. The R/$-exhange rate movement
INTERNATIONAL
FUNDAMENTAL FACTORS
International economic situation
The dollar weakened against the
most important currencies in the
world. The rand strengthened
against the dollar in the process.
The rand/dollar exchange rate has
the most significant correlation of
all the variables which impact the
South African commodity prices.
The strengthening of the rand will
therefore also have a reasonably
negative impact on local commod-
ity prices. (Graph 1). Graph 2. American yellow maize price (c/bu) movement on CBOT (Reuters).
International commodity prices
Large carry-over stocks and rela-
tively favourable growing condi-
tions over the largest part of the
world are putting pressure on the
international prices of commod-
ities such as maize, wheat and
soybeans. The next graph indicates
the price movement of yellow
maize on the Chicago Stock
Exchange. Graph 2 indicates a
slight increase in the American
yellow maize price, but it comes
with the traditional price trend
where prices increase slowly after
harvest time until the pollina-
tion process has been finalised
and when there is more clarity
about the crop. The American
yellow maize price declined to a
reasonable extent over the past
three seasons. The relatively low
American yellow maize price is,
APRIL/MAY 2017 • SENWES Scenario
however, putting pressure on the
South African white and yellow
maize price.
Energy prices
As we know the Americans use
approximately 35% of their
total corn crop to produce eth-
anol. At the current price levels
of American corn, seven of the
largest ethanol plants in the USA