FOOD-FOR-THOUGHT WEEKLY - 5 March 2021 - Rand Agri
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5 March 2021
WEEKLY
FOOD-FOR-THOUGHT
Weather
- South African weather forecast
- International weather forecast
Parities
- Import and export parities for yellow maize
International Agriculture
- South American crop conditions
FOOD-FOR-THOUGHT - South American plant progress
CONTENTS Local Agriculture
- Imports and exports of maize
- Agriculture news: Crop Estimates report 2020/21
- Agriculture news : Supply and Demand estimates
Currencies
- Overview - USD/ZAR
Rand Agri Snapshot
- Trader snapshot: What does a 70/30 contract involve
- Field report: Crop progress
LOCAL
WEATHER 14-day weather forecast
Moderate rain showers are forecast for parts of the eastern interior. However,
parts of the Free State can expect drier weather conditions.
USA Drought Monitor 2 @2 March 2021 5 March 2013 The monitor shows a further deterioration in conditions over large parts of the Midwest and producing regions. See on the right the comparison to the same time in 2013. (2 March 2021 versus 5 March 2013). According to the monitor, this is the closest corresponding period in recent history. Follow the link to stay up to date with the latest drought conditions in North America: https://droughtmonitor.unl.edu/CurrentMap.aspx INTERNATIONAL WEATHER 10-day weather forecast: South America Brazil and Argentina can both expect drier conditions in the coming week. This can give the soybean harvest a significant boost.
INTERNATIONAL
WEATHER
Argentina rainfall: January - February
Oct-Dec 2020 precipitation was at a 10-year low, but in January 2021
rainfall was 30% above average, DOUBLE the amount in Jan 2018.
Additionally, temperatures have been favourably cooler for much of this
season.
Rainfall was about 41% below the long-term average in Argentina's grain
belt last month. That was better than both 2019 and 2018.
IMPORT & EXPORT
PARITIES
Mar’21 May’21 Jul'21 Sept'21
PMB import parity R 4 520 R 4286 R 4 591 R 4 380
CPT export parity R 4 404 R 4 134 R 4 316 R 4 094
SAFEX yellow maize R 3 386 R 3 334 R 3280 R 3 333
DBN export parity R 3 235 R 3 236 R 3 280 R 3 333
SOUTH AMERICA
AGRICULTURE
South American crop conditions up to 26 February 2021
Soybeans Corn
15% 15% 12%
30%
Good to excellent Good to excellent
Average Average
Poor Poor
70% 58%
1%
2%
11% 35%
19%
12% 39%
24%
64%
59%
70% 2019/20
2019/20
64%
Previous Week
Previous Week
Soybean conditions deteriorated slightly since the
previous week, while corn improved by 6%
BRAZIL
AGRICULTURE
Brazil soybean harvest up to 26 February 2021
In the Mato Grosso
district of Brazil
52,14% of soybeans
are harvested.
BRAZIL
AGRICULTURE
In the Paraná district
of Brazil 23% of
soybeans are
harvested.
(Previous Year 54%)
BRAZIL
AGRICULTURE
South America corn plant tempo up to 26 February 2021
In the Mato Grosso
district of Brazil the
safrinha corn plant
pace is currently at
54,66%BRAZIL
AGRICULTURE
In the Paraná district
of Brazil the safrinha
corn plant pace is
currently at 28%
(Previous Year 72%)LOCAL EXPORTS 2020/21
AGRICULTURE
Destination for most exports:
• Exports week ending 26 February: 21 745 t
WMAZ exports:
White Maize •
•
Previous week: 55 815 t
Imports: 0 t Zimbabwe 11 135 t
• Export intentions: 176 040 t
(Next 8 weeks)
• Exports week ending 26 February: 10 423 t
• Previous week: 8 448 t YMAZ exports:
Yellow Maize • Imports: 0 t Zimbabwe 5 611 t
• Export intentions: 64 741 t
(Next 8 Weeks)LOCAL
AGRICULTURE
NECC First Production Forecast for 2020/21
Last week, 25 February, the CEC released its first production forecast for summer Quick stats:
crops for 2020/21. • Maize is estimated at 15,8 million ton - 4% higher than
last season
The report of an expected 15,8 million ton maize crop created optimism about a • Soybeans are estimated at a record 1,6 million ton - 30%
possible record season among market players. It is the largest first estimate ever. higher than 2019/20
• Sunflower is estimated at 712 940 ton - 10% lower than
Market players are expecting this figure to increase considerably in the next eight the previous year.
reports for the season.
Read more:
This is definitely a record figure and makes the Reuters analysts’ 16,8 million ton https://www.thesouthafrican.com/news/maize-prices-could-
seem like a realistic target. drop-as-record-crop-expected/
Sunflower acres for the new season have declined considerably, due to For a statistical analysis of the crop estimates report, see:
unfavourable conditions in the previous year as well as good maize prices that https://www.youtube.com/watch?v=d7uwWP9a8yg
encouraged farmers to switch acres to maize.LOCAL
AGRICULTURE
NECC First Production Forecast versus Final Production
Yellow Maize White Maize
12000000 12000000
10000000 10000000
8000000 8000000
6000000 6000000
4000000 4000000
2000000 2000000
0 0
2020/21 2019/20 2018/19 2017/18 2016/17 2020/21 2019/20 2018/19 2017/18 2016/17
First Estimate First Estimate
Final Production Final ProductionLOCAL
AGRICULTURE
NECC First Production Forecast versus Final Production
Sunflower Soybeans
1000000 1800000
900000 1600000
800000 1400000
700000 1200000
600000 1000000
500000 800000
400000 600000
300000
400000
200000
200000
100000
0 0
2020/21 2019/20 2018/19 2017/18 2016/17 2020/21 2019/20 2018/19 2017/18 2016/17
First Estimate First Estimate
Final Production Final ProductionLOCAL
AGRICULTURE
February SASDE Estimates
MAIZE SOYBEANS
White Yellow White Yellow
2020/21 2021/22 2021/22 2021/22 2020/21 2021/22
Supply 8 789 223 6 888 146 9 706 083 7 053 246 Supply 1 479 955 1 665 355
Demand 7 646 500 6 454 500 7 812 000 6 492 500 Demand 1 405 500 1 535 600
EXPORTS 1 185 000 1 500 000 1 170 000 1 630 000
Ending Stock
Ending 74 455 129 755
1 142 723 433 646 1 894 083 560 746
Stocks
Days Stock? 19 31
Days stock? 65 33 105 43
SUNFLOWER
2020/21 2021/22
Supply 931 225 788 315
Sunflower stocks can expect
tight levels for the next 12 Demand 863 250 733 250
months.
Ending Stock
67 975 55 065
Days stock? 29 28EXCHANGE RATE
R/$
The South African rand weakened
against the US dollar in the first week
of March due to a stronger dollar
index.
The technical analysis shows a
possible move to R15,65 and an
upward trend for the long term.
https://www.dailyforex.com/forex-
technical-analysis/2021/02/usdzar-
forecast-march-2021-february-28-
2021/158855A 70/30 contract? • The producer’s contract price is for example R3 000 x 100 ton =
Under a 70/30 contract option, the producer prices his grains for R300 000
the delivery month. At the same time, it allows him to take a long • 70% of the total contract price for the July delivery is paid out
position on the market in a future month for speculative purposes, (R300 000 x 70% = R210 000) upon delivery and 30% of the total is
to participate in Safex movements in the future month. retained for market movement purposes on the December
position (R300 000 x 30% = R90 000).
The purpose of a 70/30 contract option: • In October, the producer decides to close his 70/30 position on the
This benefit of such a contract is that it supports cash flow December position at R3 400. The 70/30 made a R50 per ton profit
management. The producer receives 70% of the contract value due to market movements (purchase level R3 350 minus selling
upon delivery, for example, in July, and participates rand-for-rand level of R3 400).
in the market, e.g. the December Safex. The client is at liberty to • The following is then paid out to the producer:
decide in which month he wants to buy back his position. R90 000 – 30% retained amount RAND AGRI
min R1 000 – 70/30 hedging costs (R10 x 100 t)
How does the 70/30 contract option work?
Let’s assume that a producer wants to price his crop in the July
2021 Safex month, because he is going to deliver his crop between
plus R5 000 – 70/30 hedging profit
R94 000 – paid out to the farmer Trader Snapshot
1 and 31 July, but he also wants to participate in market Example 2:
movements in a future month (for example December 2021) • The farmer informs the buyer that he wants to hedge 100 ton of
because he thinks the Safex market is likely to increase. yellow maize using a 70/30 contract for a July delivery and
• We price the producer’s July delivery at July 2021 Safex month December buy-back:
by taking a short position, and we take a long position on the • Rand Agri takes a short position on the July’21 Safex month YMAZ
market for the same volume in December / March. on the market at a R3 230 Safex level and a long position on the
• Only 70% of the producer’s invoice value is paid out while 30% December ’21 Safex-month at R3 350.
is retained for the market movement. • The producer’s contract price is for example R3 000 x 100 ton =
R300 000
• When the producer decides to close his 70/30 position, i.e. the
• 70% of the total contract price for the July delivery is paid out
long position for December/March, the profit/loss is calculated
(R300 000 x 70% = R210 000) upon delivery and 30% of the total is
and paid out to the farmer.
retained for speculation purposes on the December position
• If it closes at a profit, the full amount of the retained 30% is (R300 000 x 30% = R90 000).
paid. • In November, it becomes clear that the market is not turning and
• If there is a loss on the long position, it is deducted from the continues to move downward.
retained 30% and the balance is paid out. • The farmer decides to close his 70/30 position at R3 250.
• The long 70/30 December position can be closed or rolled out • Due to market movements, the 70/30 made a loss of R100 per ton
at any time, but this must be done before the Safex month (purchase level R3 350 minus selling level R3 250).
‘close out’ date. • The following is paid out to the producer:
R90 000 – 30% retained amount
Example 1: min R1 000 – 70/30 hedging costs (R10 x 100 t)
The farmer informs the buyer that he wants to hedge 100 ton of min R10 000 – 70/30 hedging loss
yellow maize using a 70/30 contract for a July delivery and R79 000 – paid out to the farmer
December buy-back
Rand Agri takes a short position on the July’21 Safex month YMAZ
on the market at a R3 230 Safex level and a long position on the
December ’21 Safex-month at R3 350. Sells 100 ton and buys back
100 ton. Overview compiled by: Soretha Strydon– Rand Agri Byproducts Trader.CROP CONDITIONS
North West Province and West Free State: Mpumalanga:
Crops are looking great and 100% in the seed stage. The The crop potential in the various regions is above
majority of maize is currently being pollinated, whereas average. There are areas where maize harvesting
others have already been pollinated. There are however will definitely start by the end of April/May. As far
areas where pollination was problematic due to the plant as soybeans are concerned, growers will start
date as well as a lack of sun in the area for at least two
drying within the next two weeks. Interestingly,
weeks.
the soybeans have very few pods. At a glance,
Concerns were raised that if the area were to receive more
rain up to the end of April as forecast, it could very well lead
the soybean potential appears to be about 2 ton RAND AGRI
to grading problems, especially in the water table lands. It
might cause problems with drying the maize, as was the
case last season. Cooler weather during the previous week
per hectare, but the estimate is 1,5 ton per
hectare. According to producers, this is due to
the cold, wet conditions.
FIELD REPORT
is also a source of concern. Farmers are worried about early Feedback from Gerrit van der Walt - Grain
frost. As conditions stand at the moment and if these Relationship Manager
conditions continue, North West Province can expect an
above-average yield.
Feedback from Sakkie Koekemoer, Grain Buyer, North West
Province
Eastern Free State: Mpumalanga:
Farmers are very thankful for the sunny conditions over Large parts of Mpumalanga received good rains last
the past ten days with less rain - only 35 mm in the last week. Soybeans in the Maizefield area however
week. Crops are looking good over the entire Eastern suffered hail damage. More than 200 mm of rain
Free State and Natal, with little weather-related damage fell over parts between Bethal and Standerton.
reported. Maize crops look good and soybean crops Farmers with March soybeans are worried that
continue to improve weekly thanks to current favourable lands may be too wet to harvest.
heat conditions. The first sunflower plantings in the
Senekal area are almost ready to be harvested within the In general, crop conditions are very good, and an
next 21-day since it was planted early. To summarise: All above-average harvest can be expected.
grains in the area are in good condition, expect sugar Feedback from Gerhard Reyneke - Grain Buyer,
beans, which suffered damage. Southern Mpumalanga
Feedback from Christo Uys - Grain Buyer, Free StateRAND AGRI
FIELD PHOTOS
Hendrina-Tweefontein
Davel
Estancia
Ermelo-OosCONTACT US
Rand Agri grain buyers
Gerrit van der Walt (082) 308 3014
Gerhard Reyneke (082) 070 4546
Christo Uys (082) 854 6824 Tel: +27 (0) 13 243 1166
E-mail: info@randagri.co.za
Sakkie Koekemoee (066) 205 2663 Web: www.randagri.co.za
Gert Oosthuizen (083) 654 1179 Address: 24, Samora Machel Street
Middelburg, MpumalangaYou can also read
