WEEKLY OILSEED REPORT 09 FEBRUARY 2018 Unigrain (Pty) Ltd Tel. No. : +27 11 692 4400 Fax. No. : +27 11 412 1183 INTERNATIONAL MARKET Table 1: CME Soybean prices and weekly change (cents/bushel) Currently 02/02/2018 Weekly change Monthly change (c/bu) (c/bu) CME Mar-18 985 978 ¾ 6 ¼ 21 ¼ CME Jul-18 1005 ¾ 999 ¾ 6 22 US soybean contracts posted some gains in the past week with both March and July ending higher. On a monthly basis US soybean prices are also trading higher with March and July ending 2.2% higher in the past month. On the technical chart for March CME soybeans we see that the market initially gained some ground but the market has since come under some pressure. March soybeans is caught between the averages with the 200-day as support seen at $9.80 and the 100- day average seen at $9.88/bushel. Some of the short term averages and indicators are under some pressure. The weather condition in Argentina has been a source of support with the warm and dry weather conditions lowering their crop potential. US soybean market USDA released their report yesterday. The US 2017/18 soybean ending stocks was reported at 530 million bushels which was higher than the market expectation seen at 486 million bushels and lower than the January estimate seen at 470 million bushels. On the demand side the USDA lowered the US soybean export estimate by 60 million bushels compared to the January estimate. We have mentioned before that the US soybean export progress and running behind the average as seen below. 50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 Figure 1: US soybean export progress (1000 tons) 13/14 14/15 15/16 16/17 17/18 100 95 90 85 80 75 70 65 60 Exports commitments date (1000 tons) % of total exports (RHS) The 2017/18 US soybean crop of 4.392 billion bushels is a new record high for the US market and ending stocks is seen at 530 million bushels which is the highest ending stocks since the 2005/06 season. The 2017/18 US soybean stock to usage ratio is seen around 12.6%.
90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 4500 4000 3500 3000 2500 Figure 2: US soybean production and ending stocks 625 525 425 325 225 125 2000 25 Production (bil bu) Ending stocks (mil bu) (RHS) In terms of the rest of the world the 2017/18 world soybean crop was pegged at 346.92 million tons which is down from the 348.57 million tons reported last month. The USDA raised their Brazilian soybean crop estimate by 2 million tons to 112 million tons while the Argentine soybean crop estimate was lowered by 2 million tons to 54 million tons. The South America soybean crop in 2017/18 is seen at 166 million tons which is down from the record 171.8 million tons seen in the previous season. 200.0 180.0 160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 Figure 3: Argentina and Brazil soybean production Argentina Brazil The weather conditions in Argentina have been a source of support for US and world maize and soybean prices. Dry weather conditions once again dominated some of the key maize and soybean areas in the past week ending the 3 rd of February. The central and southern growing areas are the hardest hit. 2
Figure 4: Cumulative rainfall the past week The weather forecast for Argentina in the week ahead expects some rainfall in the northern parts of Argentina but the central and southern parts could see some more warm and dry conditions in the week ahead. Figure 5: Cumulative rainfall forecast for week ahead LOCAL OILSEED MARKET South African oilseed prices ended mixed in the past week with soybean prices leading the way higher gaining 2.4% while sunflower seed contracts ended 0.4% lower in the past week. We did see some more rand volatility in the past week with the rand currently trading around R12.11/$ with the rand remaining in the R11.80-R12.20/$ trading range in the past week. The weather conditions have been most favorable with some more rainfall that was seen in the past week. The weather forecast expects some rainfall in the central and southern parts of the Free State and parts of the Northern Cape. 3
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 17/03/23 17/04/06 17/04/20 17/05/04 17/05/18 17/06/01 17/06/15 17/06/29 17/07/13 17/07/27 17/08/10 17/08/24 17/09/07 17/09/21 17/10/05 17/10/19 17/11/02 17/11/16 17/11/30 17/12/14 17/12/28 18/01/11 18/01/25 18/02/08 5600 5400 5200 5000 4800 4600 4400 4200 4000 Figure 6: Safex March soybean and sunflower seed prices Mar soy Mar suns CEC released their preliminary area estimates in their report last week. South African sunflower seed area estimate seen at 560 100 hectares (-11.9% year/year) and the soybean area at 701 000 hectares (+22% year/year). The total oilseed area is seen at 1.26 million hectares which is in line with the record area seen in the 2014/15 season. 1400000 Figure 7: South African sunflower seed and soybean areas planted 1200000 1000000 800000 600000 400000 200000 0 Sunflower area Soybeans area Based on the 560 100 hectare area estimate we look at several possible sunflower seed crop estimates below. The 3-year average yield is seen at 1.19 t/ha pointing to a crop of 666 519 tons and the 5-year average yield is seen at 1.21 t/ha pointing to a crop of 677 721 tons. The 2017 yield is seen at 1.37 t/ha pointing to crop of 778 539 tons. 4
800000 Figure 8: South African sunflower produciton estimates 778539 750000 700000 666519 677721 683322 650000 600000 550000 500000 450000 3-yr avg (1.19t/ha) 5-yr avg (1.21t/ha) 7-yr avg (1.22 t/ha) 2017 Crop (1.37 t/ha) Based on the South African new crop soybean area estimate of 701 000 hectares we look at possible production estimates. The 3-year average yield is seen at 1.77 t/ha pointing to a crop of 1.241 million tons and the 5-year average yield is seen at 1.74 t/ha pointing to a soybean crop of 1.220 million tons. A record yield of 2.29 t/ha seen in the 2017 season and the new crop area estimates could result in a crop of 1.605 million tons. 1800000 1600000 Figure 9: South African soybean production estimates 1605290 1400000 1200000 1000000 800000 1240770 1219740 1184690 600000 3-yr avg (1.77 t/ha) 5-yr avg (1.74 t/ha) 7-yr avg (1.69 t/ha) 2017 Crop (2.29 t/ha) The weather forecast for the week ahead expects some moisture to move in from the north with rainfall forecasted for the Northern Cape and the central and southern parts of the Free State. The eastern growing areas could be slightly drier in the week ahead. 5
Figure 10: Cumulative rainfall forecast week ahead FOCUS FOR THE WEEK US soybean contracts managed some gains in the past week with the weather conditions in Argentina providing some support. The market did pull off the highs following the USDA report released earlier. The USDA confirmed the larger US soybean ending stocks as expected while the Argentine crop was lowered and the Brazilian crop was raised. South African oilseeds ended mixed in the past week with soybeans managing some gains while sunflower seed contracts came under some pressure. The higher US soybean prices and crush margins supported soybeans. The rand remained in the R11.80-R12.20 trading range in the past week with the rand currently trading around R12.10/$. The weather forecast expects slightly drier conditions in the eastern parts of the country in the week ahead. Technical graphs Safex Mar-17 soybean prices CME Mar-18 soybean prices 6
Daily SOYH8 2017/05/17-2018/02/22 (JHB) Cndl, SOYH8, Trade Price 2018/02/08, 4 485.00, 4 520.00, 4 485.00, 4 520.00N/A, N/A SMA, SOYH8, Trade Price(Last), 9 2018/02/08, 4 463.56 SMA, SOYH8, Trade Price(Last), 40 2018/02/08, 4 619.78 SMA, SOYH8, Trade Price(Last), 100 2018/02/08, 4 841.48 4 450 4 400 MACD, SOYH8, Trade Price(Last), 12, 26, 9, Exponential 2018/02/08, -68.91, -80.81 Value ZAR T RSI, SOYH8, Trade Price(Last), 14, Wilder Smoothing 2018/02/08, 46.272 Value ZAR T Price ZAR T 5 300 5 250 5 200 5 150 5 100 5 050 5 000 4 950 4 900 4 850 4 800 4 750 4 700 4 650 4 600 4 550 4 500 22 29 05 12 19 26 03 10 17 24 31 07 14 21 28 04 11 18 26 02 09 16 23 30 06 13 20 27 04 11 18 27 02 08 15 22 29 05 12 19 May 2017 June 2017 July 2017 August 2017 September 2017 October 2017 November 2017 December 2017 January 2018 February 2018 7
Daily SH8 Cndl, SH8, Trade Price 2018/02/09, 987.50, 988.75, 985.50, 985.75-2.00, (-0.20%) SMA, SH8, Trade Price(Last), 100 2018/02/09, 988.09 SMA, SH8, Trade Price(Last), 40 2018/02/09, 974.65 SMA, SH8, Trade Price(Last), 9 2018/02/09, 985.81 SMA, SH8, Trade Price(Last), 200 2018/02/09, 980.67 2017/05/18-2018/02/26 (CHG) RSI, SH8, Trade Price(Last), 14, Wilder Smoothing 2018/02/09, 52.727 Value USc Bsh MACD, SH8, Trade Price(Last), 12, 26, 9, Exponential 2018/02/09, 2.45, 2.40 Value USc Bsh 22 30 05 12 19 26 03 10 17 24 31 07 14 21 28 05 11 18 25 02 09 16 23 30 06 13 20 27 04 11 18 26 02 08 16 22 29 05 12 20 26 May 2017 June 2017 July 2017 August 2017 September 2017 October 2017 November 2017 December 2017 January 2018 February 2018 Price USc Bsh 1 035 1 030 1 025 1 020 1 015 1 010 1 005 1 000 995 990 985 980 975 970 965 960 955 950 945 940 935 930 925 8