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G R A IN MA RKE T PR O SPE CT S • •
Graph 3. Light sweet crude oil price/barrel (Reuters).
Graph 4. The long term July contract white maize price as well as the 2017 price
movement on Safex.
realise a gross margin of between
$0.39 and $13.42 per metric ton.
It is a very small margin and will
probably limit the maize price
movement to a reasonable extent.
Price drivers in the local
grain and oilseeds markets
WHITE AND YELLOW MAIZE PRICE
TRENDS ON THE SOUTH AFRICAN
EXCHANGE
The first crop estimate of
the National Crop Estimate
Committee (NCEC) for the sea-
son indicates that the third largest
crop in South African history will
realise. This means that, according
to the calculations of the National
Agricultural Marketing Council
(NAMC), there will be an export-
able surplus of approximately
1,3 million tons of white maize
and one million tons of yellow
maize. The chances are also good
that the NCEC may increase the
next crop estimate, which will
increase the exportable surplus
even further, the reason being
that the white and yellow maize
prices are trading in the region of
the calculated export parity. The
difference between the calculated
import and export parity can be
up to R2 300 per ton, depending
on where imports and exports are
done from.
Graph 4 indicates the price
movement of the white maize
July contract on the JSE. Since
July 2016 the contract price has
been following a declining trend.
The La Niña-episode which was
predicted for the coming season,
impacted negatively on the price
since these types of seasons are
associated with above average
yields. During December 2016
large parts of the western produc-
tion areas of South Africa did not
receive much rain and sand storms
resulted in the destruction of a
large portion of the planted sum-
mer crop, which strongly support-
ed the price for a week or more.
It is evident from graph 4 that
the July 2017 contract is moving
in a totally different direction than
the long-term July contract. As
mentioned, the large calcula ted
exportable surplus is the main
reason.
Two variables which have a
significant impact on the calcu-
lated import parity are the R/$-
exchange rate and the American
yellow corn price. Table 1 is a
sensitivity analysis which indi-
cates the effect of a change in
the R/$-exchange rate and the
American yellow corn price on the
calculated export parity. The July
2017 American yellow corn price
is in the area of $3.60 per bushel
and the R/$-exchange rate is in
the area of R12.50 for a dollar. It
translates to a calculated export
parity of R1 756 per ton. At the
time of the writing of this article,
white maize for the July 2017
contract traded at R1 723 per ton
on the JSE.
Certainty about the quantities
of white and yellow maize export-
ed and a movement of the calcu-
lated carry-over stock closer to the
required pipeline, could impact
positively on the white and yellow
maize prices. Unfortunately this
means that the white and yellow
maize prices are at the same level
of or below the calculated export
parity level to ensure that ade-
quate quantities are exported. The
current low maize price resulted
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