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GRAIN MARKET PROSPECTS
July and August 2017 : Market movements
THYS GROBBELAAR SENIOR GRAIN ANALYST , SENWES GRAINLINK
Article written : 07 July 2017
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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 .
Price drivers in the grain and oilseeds markets
INTERNATIONAL FUNDAMENTAL FACTORS Exchange rate movements As discussed in previous articles , the rand / dollar exchange rate has the biggest correlation of all the variables impacting on South African commodity prices . Political movements , particularly in the financial market in South Africa , resulted in huge fluctuations in the rand / dollar exchange rate . The next graph indicates that the South African white maize price and the rand / dollar exchange rate are closely related . When the rand / dollar exchange rate declines , the South African maize price on the JSE increases . South African commodity prices form at a level of the calculated import parity or export parity of between the two levels , depending on the situation in respect of the calculated carry-over stock of the commodity concerned . Should the price of the commodity stabilise at the relevant parity price , depending on the
AUG / SEP 2017 • SENWES Scenario
Graph 1 . A comparison between the JSE white maize price and the R /$ exchange rate .
Graph 2 . The relationship between the JSE white maize price and the CBT yellow maize price .
calculated carry-over levels , the exchange rate will play the largest role in the price forming process .
This trend is evident in the first graph .
All eyes are always on the price movements of American yellow corn on CBOT . The price movements of white maize on the JSE and yellow maize on the CBOT since April 2016 are indicated in the same graph . It is evident that there is not a strong relationship between the two commodity prices . The American yellow corn price increased fairly consistently since September 2016 , while the JSE white maize price decreased consistently for the corresponding period . At this stage the