Global and SA Agricultural Viewpoint

• The 2018/19 global maize harvest could be the second largest on record, up by 3% y/y at 1.07 billion tonnes. This is underpinned by expected large harvests in the US, Brazil, Argentina, Ukraine and China. Nevertheless, the global maize stocks will remain tight due to an increase in consumption, particularly animal feed as traditional buyers of wheat are shifting to maize due to price competitiveness. Therefore, the stocks could fall by 13% y/y to 266 million tonnes.
• The results of drier weather conditions that affected the wheat crop earlier in the season in Russia, Ukraine, Australia, China, India and the European Union region are reflected in the International Grains Council’s 2018/19 global wheat production estimate of 729 million tonnes, down by 5% y/y. This could then lead to a 3% y/y decline in stocks to 262 million tonnes.
• The 2018/19 global soybean production is set to increase by 8% y/y to 367 million tonnes on the back of expected large harvests in the US, Brazil, Argentina, China, India, Paraguay, Ukraine, Russia and Uruguay, amongst others. As a result of this improvement in production, the 2018/19 global soybean stocks could be up by 28% y/y to 51 million tonnes, despite the expected uptick in consumption over the corresponding period. Similar to soybeans, the 2018/19 sunflower seed production is projected to increase by 5% y/y to 52 million tonnes boosted by an expected large harvest in the Black Sea region.
• From a South African perspective, the aforementioned developments will have minimal direct implications in the case of maize as South Africa is a net exporter. But other commodities are interlinked to the SAFEX market as the country is a net importer of wheat, soybeans and sunflower seed by-products. The price dynamics are somewhat a result of the aforementioned fundamental factors, and the price movements in the near-term are likely to maintain a similar trend, except soybeans which continue to be largely affected by the US-China trade dispute.

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Sourced: Agbiz, Agribusiness Research