Last week, the US grain stock report was released. It was lower than the industry expected, but not enough to cause a shock. Consequently, along with other factors such as China’s attempt to stimulate their economy with an interest rate cut, we suspect that the international grain market is becoming increasingly demand-driven. This means that prices will be more influenced by demand rather than supply.
The spot price for white maize rose week on week to R5,589, while the price for July ’25 fell to R3,919. The spot price for yellow maize, however, increased week on week to R4,413, with the July ’25 price now at R3,793 per ton. CBOT corn has been in a downward trend since last Wednesday due to American harvest pressure, which is now putting prices under pressure. Argentina has also reported that their maize plantings are happening slower than usual due to drought conditions, and if this continues, it could bring support to the market. Locally, we see that white and yellow maize are still trending upwards, although yellow maize tested higher levels last week. When we calculate the correlation between local prices and CBOT maize prices from April 2024 to now, we see a negative correlation of 57% for white maize, which we can attribute to local prices rising due to shortages and drought, while international prices have fallen. We now expect that for spot prices there may still be upward potential until the end of the year as the sentiment of shortages could grow. However, if we look at the long-term May and July contract prices, we expect that there could be upward potential since there is still uncertainty around rain and whether we will struggle to plant. Should we then receive rain predictions and producers can start planting, we expect prices to move downwards as the uncertainty begins to fade from the market.
The spot price for soybeans decreased week on week to R8,670, while the May ’25 price remains unchanged at R7,705 per ton. The sunflower spot price rose week on week to R9,620, with the May ’25 price at R9,286 per ton. CBOT soybeans have been in a downward trend since last Tuesday due to American harvest pressure and various weather models predicting that Brazil could start getting rain from next week, allowing them to make better progress with their plantings. We have calculated the correlation between CBOT soybeans and local prices from April 2024 to now and found a positive correlation of 69.4%. This is due to higher international prices as a result of Brazil’s drought and higher local prices due to drought conditions locally. In the short term, we still see upward potential for sunflower as it has broken through higher levels, which can be attributed to the dry conditions in Ukraine at the moment. The sunflower market may positively influence soybeans, but if Brazil starts getting rain from next week, it could put pressure on soybean prices again.
The spot price for wheat rose week on week to R5,965, with the December price at R5,990 per ton. Internationally, wheat-producing areas are experiencing significant pressure. Russia has declared two production areas as disaster zones due to drought, and it is suspected that Ukraine is also suffering under similar conditions. Locally, we are entering the new 2024/25 marketing season for wheat this week and will begin to measure deliveries against the new season’s yield estimates. We have calculated the correlation for the wheat spot price against the CBOT price from April 2024 to now, showing a positive correlation of 52.7%. Looking at the graph, we can see that the wheat price has gained slight support and has started trading upwards over the past week. In the short term, we expect this price to stay around this level as harvest time approaches, but if there are quality issues or problems harvesting due to wet conditions, we may see this price gain support again. Furthermore, we are monitoring the drought in Russia and Ukraine, which could provide further support.
The sorghum import parity price landed in Durban fell last week to R5,310 per ton, while the producer’s import parity price for shelled Argentinian peanuts rose to R26,018 per ton, and the cotton import parity price traded at R10,130 per ton.