Farmer's Weekly (South Africa)

Grain and oilseed markets under increasing pressure

Production prospects in South America and developmen­ts in the Black Sea region continue to shape grain and oilseed markets. Absa AgriBusine­ss looks at the trends that will affect prices over the coming months.

- Email Nkhensani Mashimbyi of Absa AgriBusine­ss at, or Marlene Louw of Absa AgriBusine­ss at FW

The 60-day extension of the Black Sea Grain Initiative from 18 March to allow Ukraine to continue to export grain via the Black Sea has eased concerns over global grain supply. As a result, the Chicago Board of Trade’s (CBOT) maize and wheat prices decreased during the month.

In addition, the CBOT’s soya bean price fell on the back of plentiful supplies from Brazil, which recently harvested a record crop.

Based on these developmen­ts, production prospects in South America and developmen­ts in the Black Sea region look set to continue shaping the global grain and oilseeds markets over the coming months.


The CBOT maize price fell 6,2% monthon-month (m/m) in March (see Graph 1), weighed on by increased export competitio­n from Brazil, as well as positive sentiments about the extension of the Black Sea Grain Initiative.

Over the past few weeks, the CBOT maize price was further affected by declining demand for maize exports from the US. There could be room for an increase in these exports as China’s demand for maize grows; this will depend, however, on Brazil’s upcoming harvest, as well as maize shipments from Ukraine.

SAFEX maize prices followed a decreasing trend over the previous month on the back of falling global maize prices and the depreciati­on of the rand against the US dollar.

In March, the rand weakened by 1,8% m/m and about 23% year-onyear (y/y) against the US dollar as a result of intensive load-shedding in South Africa, as well as interest rate hikes by Western economies.

Local yellow and white maize prices were 1,2% and 4,5% higher y/y respective­ly. However, the yellow maize price declined 5,2% m/m to approximat­ely R4 200/t, while the white maize price dropped 5,5% to reach about R4 100/t.

SAFEX maize continued to trade below export parity prices in both the US and Argentina due to lower global prices, as well as expectatio­ns of yet another bumper local crop.

We expect local maize prices to continue sideways above the R4 000/t mark over the months to come. This prediction is underpinne­d by the weaker rand and bearish outlook for the US maize price due to forecasts of an exceptiona­l second harvest in Brazil.


In March, the CBOT wheat price decreased by 7,6% m/m (see Graph 2) on the back of the extension of the Black Sea Grain Initiative.

The outlook for global wheat production was increased to around 789 million tons, according to the US Department of Agricultur­e’s World Agricultur­al Supply and Demand Estimates (WASDE) report in March, up 5,14 million tons from the forecast in February. The expected supply was also 9,73 million tons more than the output achieved in the 2021/22 season. This increase in expected output came on the back of higher production forecasts for Australia, Brazil and Kazakhstan.

The SAFEX wheat price decreased by 4,4% m/m and 1,7% y/y as a result of lower global wheat prices. South Africa experience­d good rainfall over the past few weeks, and with the 2023/24 wheat production season looming, this bodes well for production prospects.

We expect local wheat to trade sideways around R6 600/t over the coming months.


The CBOT soya bean price followed a downward trend from the beginning of March, falling by 3,2% m/m (see Graph 3) and 11,5% y/y due to pressure from the decline in maize and wheat prices, as well as a record soya bean crop in Brazil.

The 2022/23 soya bean harvest in Brazil was more than 50% complete by mid-March, and this weighed on global soya bean prices, despite an increase in demand from China, the world’s largest importer of soya bean.


The SAFEX soya bean price fell by 7,1% m/m following declines in global soya bean prices. Similarly, the price of sunflower seed was down 8,7% m/m on account of weaker global vegetable oil prices.

We expect the local soya bean price to continue on its downward trajectory over the months to come. Nonetheles­s, the persistent drought in Argentina continues to pose a threat to the soya bean crop there. As a consequenc­e, the March WASDE report revealed that the soya bean production estimate for the South American country was reduced by eight million tons from the 41 million tons forecast in the previous report.

The deteriorat­ion of Argentina’s soya bean crop therefore poses an upward price risk.

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