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G R A IN MA RKE T PR O SPE CT S • •
net margin is currently between
$0,02 and $0,18 per gallon of
ethanol produced. It means that
the American corn price is not
receiving much support from the
current crude oil price.
Price drivers in the
domestic grain and
oilseeds markets
Graph 3. Calculated carry-over stock levels of white maize in South Africa.
South African maize price is not
receiving much support from the
American maize price.
International commodity prices
The Americans are quite con-
cerned about their corn, soya bean
and spring wheat yield prospects.
It is fairly dry and various market
participants predict lower yields,
which means that the prices of
the commodities concerned are
increasing.
The international maize pro-
duction and consumption are
increasing consistently, particularly
since 2000. The calculated car-
ry-over stock as percentage of con-
sumption decreased significantly
over the past two marketing years,
which supports the international
price to some extent. Large areas
in the American maize production
area are still dry, which supported
the price over the past few days.
Although the USA is experiencing
moderate climate conditions, cli-
mate plays a huge role in the price
forming process.
The world soya bean carry-over
stock as percentage of consump-
tion is 26,7% at present, while
the world wheat carry-over stock
as percentage of consumption is
35,5%. Relatively high carry-over
stock levels put pressure on prices
to some extent. The next graph
reflects the latest production,
consumption and carry-over stock
expectations in the USA.
Energy prices
As we know, the Americans use
approximately 35% of their total
maize crop for ethanol produc-
tion. Maize used for ethanol pro-
duction represents 44% of their
local consumption. The crude
oil price is at a reasonable level at
present and Brent crude oil was
in the region of $43 per barrel in
June 2017. At the current inter-
national crude oil price and the
price at which maize is trading on
the CBOT, the net margin of eth-
anol producers is very small. The
White and yellow maize price
trends on the South African
exchange
There is some concern about the
possibility of exporting a signif-
icant portion of South Africa's
calculated white maize surplus.
Export possibilities for white
maize seem to be limited at this
stage. According to the National
Agricultural Marketing Council
(NAMC), the surplus white maize
stock levels will be 2,2 million
tons at the end of the 2017/18
marketing year. Meteorologists
predict a neutral phase of the
ENSO-phenomenon, which is
usually associated with good grain
yields. The question remains: Will
we produce another surplus next
year and for how long will we
hover around the calculated export
parity level?
The carry-over stock levels of
yellow maize, as calculated by the
NAMC, do not seem to be prob-
lematic. Exports from South-East
Asia have already commenced
and various market participants
are positive that we will be able
to limit yellow maize carry-over
stock levels. For this reason the
price of yellow maize is R110 per
ton higher than the price of white
maize. However, there is quite a
movement in respect of the con-
sumption of white maize for ani-
mal feed. The question remains:
How long will we hover around
the calculated export parity levels?
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