The forecasted trends to the right are underpinned by the following fundamental factors: • Global wheat prices are likely to come down over the medium term due to expected improved production conditions for the US and Argentina. This is also expected to improve stock-to- use levels. • Global wheat price decreases are also underpinned by optimism regarding the extension of the Ukraine-Russia grain deal for 2023 with Ukraine seeking a longer term for the agreement and additional ports. Talks during March did result in an extension, but clarity around the term of the extension is uncertain. Ukraine notes a negotiated extension of 120 days, whilst Russia says it is only for 60 days. • Exchange rate depreciation is expected to offset some of the effects of global wheat price decreases in the local market. As a result, our local price projections also follow Looking Ahead
Local grain prices are projected to ease over the coming years
Table 2.7
Yellow Maize
Wheat
2019 2020 2021 2022
R 4 500 R 5 171 R 5 430 R 7 015
R 2 6963 R 2 921 R 3 428 R 4 351
Forecasts
R 3 900 R 3 745 R 3 895
R 6 400 R 6 175 R 5 990
2023 2024 2025
Source: Absa AgriBusiness, 2023
• A favourable supply response is already apparent in Brazil, where a record crop is expected and exports from this region have significantly increased over the past weeks. • Locally, yet another bumper crop of around 15.5 million is expected for the current season. • This expectation has pushed local prices below parity levels. With high production expected in most of our traditional regional trading partners, deep sea exports would be required to work away excess production. Capacity for deep sea exports is only around 350 000 tons per month and as a result of this bottleneck, prices have dipped below export parity levels at the end of February.
a downward trend but it is more modest compared to global price trajectories.
• In terms of yellow maize, global prices are expected to ease on the back of the positive supply response to high global prices over the medium term.
The continued flow of corn exports from the Black Sea could also lead to global price easing.
37
Made with FlippingBook interactive PDF creator