1. Art and Diseño

_________________________________________________________________________
AGRI TRENDS
Weekly Market Analysis
W
30 January 2015
The world sugar situation!
There have been large amounts of sugar in the world market, and hence the lower
sugar prices. The rise in prices earlier this decade encouraged a major expansion in
production which has led to a quick build-up in stocks. For 2015, the world sugar
output is however expected to decrease, as lower prices are depressing the industry
and discouraging production. The lower prices have resulted in the closing down of
mills because they were not profitable, especially in Brazil. Brazil and India are the
biggest producers and they are both under pressure. In India, The lower prices have
put increasing pressure on the government to subsidize exports and reduce stockpiles.
On the local front, the drought in the KZN is expected to reduce production levels. The
January 2015 RV price for the 2014/15 season in respect of the cane delivered in
December 2014 was declared at R3358/t.
Beef Market Trends

International:.High supplies out of
New Zealand, as well as the impact of
the port slowdown in the US has
flowed through to manufacturing beef
prices over the past week. The port
slowdown makes buyers hesitant, and
there are also reports in the market
that recent storms slowed food service
demand, as customers were likely to
stock up at the supermarket and stay
indoors. Schedules have however
continued to soften with the dry
weather. New Zealand steers and
cows traded 1,08% and 1,45% lower at
NZ$ 457 and NZ$ 340 per head. The
US cattle herd has expanded in 2014,
for the first time in eight years. The USDA has reported that the nation’s cattle supply increased by
st
1% in the year through the 1 of January to 89.8 million head. In the US, beef traded mostly lower
as follows: Top side traded lower at $275,84/cwt, Rump traded higher at $358,44/cwt and Strip
loin traded lower at $498,35/cwt. Chuck traded lower at $318,58/cwt, Brisket traded lower at
$341,22/cwt which gave us on average carcass price of $355,56/cwt.

Domestic: When compared to last week, prices have traded mostly lower. The prices of the
different meat classes were as follows: Class A prices decreased by 2.84% to 32.20/kg, Class C
prices increased by 2,75% to R28.67/kg and Contract prices decreased by 1,61% closing at
R32.99/kg fifth quarter included. The weaner prices traded slightly lower compared to last week
and at R21.11/kg. The average hide price traded slightly lower at R18,09/kg. Hide prices have
been on a downward trend over the past months following the international prices lower.
Absa Weekly Market Analysis
Outlook
Internationally, beef prices are expected to move sideways in the short term with a possible downward
pressure due to higher supplies out of New Zealand and the port slowdown. In the medium term,
possibilities of good rains could slow slaughter rates in Australia, which could support prices.
Normally during January and February, prices tend to drift lower due to the overhang of the
overspending during the festive season, and the demands on consumers as the new school year stars.
Currently, it is a typical January-February months in terms of supply and demand, and therefore prices
are expected to remain at soft levels.
Mutton Market Trends


International: In New Zealand, this
January, dry conditions have
forced many farmers to slaughter,
pushing more lambs on to the
market, which should also provide
an atmosphere of a well-supplied
market
for
Easter
demand.
Demand is yet to pick up in a
number of key markets including
China and the Middle East.
Markets are resistant to take on
more stock because there are
significant inventories already in
place, leading to softening in export
returns from these markets.
Schedules have continued to be
soft. The New Zealand lamb and mutton traded lower this week compared to last week; lamb
closed the week at NZ$75.7/head for 15kg. Ewes closed lower at NZ$56.4/head for a 21kg ewe.
Import parity prices for lamb and mutton were slightly mixed at R52.86/kg and R36.69kg
respectively as there were declines in international prices. Australian supplies are expected to
start tightening in 2015 and exports return to normal levels should good rainfall continue to be
realized. There are expectations of reduced supplies in Australia..
Domestic: The mutton prices traded slightly stronger during the week with Class A trading
slightly higher at R56.65/kg and Class C slightly higher at R41.17/kg compared to the previous
week. The price for feeder lambs traded slightly higher at R24.01/kg. The average price for
dorper hides traded higher at R95/hide and merino traded slightly lower at R60,83/hide
respectively. The landed imported price of mutton rib from Australia and New Zealand traded
slightly higher at R 27,80/kg compared to the previous week and mutton shoulders traded the
same at 44,25/kg according to (Association of Meat Importers and Exporters) AMIE.
Outlook
Internationally, prices should remain soft on the back of softer demand in the market and slow growth in
global economies. The market is currently well supplied. Demand is expected to improve in the weeks
heading to Easter. In the medium term, good rains out of Australia are expected to curb domestic
supplies. Locally, prices are expected to be under pressure in line with seasonal trends and higher
volumes as lambs come to weight.
Absa Weekly Market Analysis
Pork Market Trends

International: US pork prices all
traded lower over the past week,
despite a decrease of 5,85% in
loads.
Carcass prices traded
7.26% lower at US$78.04/cwt,
Loin
traded
lower
at
US$87.13/cwt, Rib prices traded
3.38% lower at US$145,57/cwt
and Ham traded lower at
US$63.08/cwt. The import parity
decreased on the back of the
lower international prices. US
hogs continued to trade at lower
levels last week, as herds bounce
back from a virus. New vaccines
and herd immunity have slowed
the spread of the virus. Market watchers are bracing for record production as hogs bred after
the virus was brought under control to reach slaughter weight. The USDA has reported that an
estimated 2.32 million hogs were processed for pork in the week though 24th of January, which
is an increase of 4.6% from the same week last year. The big supplies comes at the same time
that demand is slowing, as US pork exports have fallen in recent months.

Domestic: Domestic prices have declined over the past week with Porker prices at
R25.80/kg while Baconer prices still strong at R24.00/kg. Last year, prices were on an
upward trend while grain prices were low which in turn improved the profitability in the
industry.
Outlook
Internationally, prices are expected to soften slightly as a result of higher supplies in the market, as
production volumes increase on the back of lower grain prices. Domestic prices are also expected to
continue to decrease on the back of higher production volumes. In some regions demand is not too
strong and there are enough supplies in the market. The industry as a whole will, however, remain
highly profitable especially if the rains continue to increase grain yields.
Absa Weekly Market Analysis
Poultry Market Trends

International: The poultry prices in
the US traded mostly lower over the
week compared to the past week,
because there are higher volumes in
the market. Whole bird prices traded
2.96% lower and at 93.9 USc/lbs.
Breasts and leg Quarters traded at
138,0 USc/lbs and 45.0 USc/lb
respectively. In the US, broiler
supplies have been increasing
steadily in the past few months. The
latest data also points out that higher
production volumes is expected to
continue into February and March.
The growth in production is expected
to come through both higher slaughter numbers as well as notable increases in broiler weights.
Meanwhile, Ghana is considering banning Nigerian poultry products on a temporary basis after
reports of rising cases of avian flu. This ban is to prevent the spread of the disease.
 Domestic: Poultry prices remained firm during this week compared to the previous week. Frozen
birds traded slightly higher at R22.97/kg compared to the previous week. Whole fresh medium
bird prices traded slightly higher at R23.14/kg while IQF traded slightly lower at R19.93kg. There
are talks that there is no build-up of stocks in the market currently and that there is sufficient to
good demand to support the stock levels. There are however some low value products that are
currently well supplied. The South African Poultry Association is trying to reach an agreement
with the US poultry exporters on how much US poultry should be allowed into the country. This
comes as the industry is under pressure from US exporters to end duties on poultry imports.
These US exporters have threatened to block the inclusion of SA in the new US-Africa Agoa
(African Growth and Opportunity Act) trade agreement should the country not be compliant.
Outlook
Internationally, prices are expected to maintain the downward trend as a result of higher production
volumes, and pressure from competing meats. This is due to expected higher slaughter rates and
expected increases in broiler weights. Domestic prices are also expected to decline in line with seasonal
trends. There is however sufficient demand to meet supplies, as there is not a build-up of stocks in the
market.
Livestock Prices
(R/kg)
30 Jan 2015
Beef
Mutton
Pork
Poultry
Current
Week
Previous
Week
Current
Week
Previous
Week
Current
Week
Previous
Week
Current
Week
Previous
Week
Class A / Porker
/ Fresh birds
Class C/
Baconer /
Frozen birds
Contract /
Baconer/ IQF
Import parity
price
32.20
33.14
56.65
54.45
25.80
25.82
23.14
23.08
28.67
27.90
41.17
38.77
24.00
23.85
22.97
22.88
32.99
33.53
57.00
55.27
24.90
24.84
19.93
20.03
49.81
51.46
36.67
36.48
24.21
27.11
15.39
15.27
Weaner Calves /
Feeder Lambs/
Specific
Imports: Beef
trimmings
80vl/b/Mutton
Shoulders/Loin
b/in /chicken
leg1/4
21,11
21,28
24,01
24,00
-
-
50,45
50,45
44,25
44,25
37.50
37.60
20.85
20.80
Absa Weekly Market Analysis
Yellow Maize Trends

International: When compared to the
previous week, maize closed the week
lower. The average US yellow maize spot
price closed the week 3.55% lower at
US$171,73. Maize saw pressure from
favourable crop conditions in South
America as well as ample global grain
supplies. Prices were weighed down by
the large world supplies as well as soft
demand. There seemed to be good
exports from Ukraine, which provided
strong competition for the US crop. There
are cargo backups at the West Coast
ports as a result of labour disputes, and
this is also pushing the prices of maize down in Illinois. China, on the other hand has large
domestic stocks which might lessen demand from that side.

Domestic: The local maize market for yellow maize traded 0.18% higher at R2016/ton, on the
back of weather concerns. Prices are lower than a year ago, mainly as a result of good summer
rains up to now creating the perception that stock levels will increase. However, weather may
influence prices significantly.
The average exchange rate for the week moved sideways to
R11,55/US$ compared to R11,55US$ the previous week. The futures prices traded higher as
follows: Mar-15 contracts increased by R56/t to R2094, May-15 contracts increased by R25/t to
R2065/t, Jul-15 increased by R38/t to R2058/t, Sep-15 contracts increased by R33/t to R2091/t
while Dec-15 also increased by R33/t to R2148/t. The Crop estimate Committee (CEC) released
the preliminary area planted estimates last week. The report showed that the preliminary area
estimate for maize was at 2,656 mil hectares, which is a decrease from 2,688 mill hectares which
was planted in the previous season. However, the area for yellow maize was 31800 hectares
higher than that planted in the previous season at 1,169 mill hectares.
Outlook
International maize prices are expected to remain bearish, with pressure coming from the ample global
supplies and favourable conditions in South America. On the local front, prices increased on the back of
dry weather conditions. However, there were some scattered showers in parts of Mpumalanga, North
West and western Free State, which unfortunately were not enough to bring some relief. Prices are
expected to continue to increase in the next week as dry conditions are expected to remain, especially
in the western side of the country, and therefore provide some support to prices. Recent weather
forecasts continue to show no signs of rain this coming week.
Yellow Maize Futures
30 Jan 2015
CBOT ($/t)
SAFEX (R/t)
Ask
2,100
2,060
2,020
May-15
Put
120
98
79
Mar-15
May15
Jul-15
Sep-15
145.66
2,094
148.197
2,065
Jul-15
Ask
Put
151.96
154.72
157.71
2,091
2,148
Sep-15
Ask
Put
Call
Call
85
103
124
2,100
2,060
2,020
145
123
102
2,058
Call
103
121
140
2,140
2,100
2,060
Dec-15
173
151
130
124
142
161
Absa Weekly Market Analysis
White Maize Trends


International: The US white maize
spot market traded 1.27% lower at an
average of US$ 160.22/t over the past
week compared to an average of US$
162.29/t the previous week. Import
parity prices traded 0.93% lower,
compared to the previous week
supported by the lower international
prices.
Domestic: The local average white
maize spot price traded 0.18% higher or
R3,60/t higher at R2016/t compared to
the previous week. This was due to
weather concerns. The CEC results have
revealed its area estimates for white
maize at 1,488 mill hectares, which is a decrease of 63550 hectares from the previous season.
Outlook
Internationally, white maize price are expected to continue with decreases as with yellow maize
prices in the short term due to ample global supplies. Locally prices are expected to follow the
trend of the local yellow maize.
White Maize
Futures
30 Jan 2015
SAFEX (R/t)
May-15
Ask
Put
Mar-15
2,123
Call
Ask
May15
Jul-15
Sep-15
Dec-15
2,101
Jul-15
Put
2,096
2,130
2,180
Call
Ask
Sep-15
Put
Call
2,140
126
87
2,140
148
104
2,160
165
135
2,100
104
105
2,100
126
122
2,120
143
153
2,060
84
125
2,060
106
142
2,080
123
173
Absa Weekly Market Analysis
Wheat Market Trends

International: Wheat closed the week
lower compared to the previous week.
Wheat saw some losses due to weak
export demand as well as plentiful world
supplies. Indications that global supplies
are more than enough to meet demand
continued to drive prices down. Wheat
prices were under pressure from
favourable weather in key US producing
regions. The average weekly wheat spot
price traded 3.52% lower compared to the
previous week at US$228,8/t. Soft red
wheat traded 2.94% lower, while hard red
wheat traded 4.05% lower. Import parity
traded 2.8% lower due to the lower
international prices. Beneficial rain is expected to continue in the US, after showers improved
moisture in the past weekend. There are also reports of the slowdown in exports in Russia and
Ukraine.

Domestic: The average SAFEX wheat spot price increased from last week’s and traded at
R3911/t despite the lower international prices. Mar-15 futures increased by R68/t to R3968/t,
May-15 futures increased by R72/t to R4027, Jul-15 futures traded higher by R58/t to R4038/t
while Sep-15 traded R1/t higher at R3904/t. the CEC released the production estimates, and
has shown that the expected production of wheat for 2014/15 season is 15500 tons higher than
the previous forecast at 1,776 mill tons.
Outlook
Internationally, wheat prices are expected to follow a downward trend in the short to medium term due
to large global supplies in the market which should put pressure on market prices. Further pressure will
also be from the favourable growing conditions in the US. Domestic prices can be pressured this
coming week by the production results of the crop estimate committee as well as the ample supplies in
the international market. However, the weaker exchange rate could pressure prices, and therefore
prices could continue trading higher.
Wheat Futures
30 Jan 2015
SAFEX (R/t)
CME ($/t)
May-15
Ask
Put
4,060
4,020
3,980
118
97
78
Mar 2015
May 2015
Jul 2015
Sep 2015
Dec 2015
3968
184.67
4027
186.14
4038
187.91
3904
190.92
n/a
195.55
Call
Ask
Jul-15
Put
85
104
125
4,080
4,040
4,000
155
133
113
Call
Ask
113
131
151
3,940
3,900
3,860
Sep-15
Put
170
148
129
Call
134
152
173
Absa Weekly Market Analysis
Oilseed Market Trends

International: Soybeans closed the
week lower compared to the previous
week.
Soybeans
saw
spillover
pressure from other grains and better
than average yields in South America.
Further pressure was drawn from the
weakening demand in China, with
prices of the oilseed dropping 5.99%
in January. There is optimism over
crop prospects in Brazil and Argentina,
which reinforces the idea for ample
global supplies. This Monday, prices
continued to be weighed down, with
the crop weather improving in South
America, with scattered showers in
Brazil this week easing concerns
about drought decreasing soybean yields. Soybean prices week on week traded 1.2% lower at
US$ 353.11/t. Soya meal traded at US$336/t, which is higher compared to the previous week
while soy oil traded 5,5% lower at US$30.43/t compared to a week ago.

Domestic: The average soybean spot prices traded 2,29% lower at R5549/t compared to the
previous week. This is due to the lower international prices. The average sunflower spot prices
for the week traded 0.76% lower at R4,940/t compared to the previous week. The CEC has
estimated an increase in soybean plantings at 620 300 hectares. The area estimate for
sunflower seed is however less than that of the previous season at 561 000 hectares.
Outlook
Internationally, prices are expected to continue to slide lower over the short to medium term due to
expectations of a bumper South American crop, which would boost the already abundant global
supplies. Additional cancellations from China could further pressure prices. Locally, the soybean
prices are expected to trade sideways to downwards in the short to medium term following the
lower international prices. Nonetheless, the weather market is expected to continue to have a
significant impact on the domestic price movements.
Oilseeds Futures
30 Jan 2015
Mar-15
May-15
Jul-15
Sep-15
Dec-15
CBOT Soybeans (US $/t)
353.11
355.53
357.37
351.49
349.58
CBOT Soy oil (US c/b)
30.00
30.24
30.46
30.52
30.29
CBOT Soy cake meal (US $/t)
329.90
324.00
321.80
319.40
314.10
SAFEX Soybean seed (R/t)
5,263
4,850
4,890
4,940
n/a
SAFEX Sunflower seed (R/t)
5,020
4,859
4,913
n/a
5,000
SAFEX Sorghum (R/t)
2,200
2,200
2,200
2,500
n/a
Sunflower Calculated Option Prices (R/t) Absa Capital Trading Desk: 011 – 895 5524
Mar-15
May-15
Jul-15
Ask
Put
Call
Ask
Put
Call
Ask
Put
Call
5,060
144
104
4,900
199
158
4,960
316
269
5,020
123
123
4,860
177
176
4,920
294
287
4,980
103
143
4,820
157
196
4,880
273
306
Absa Weekly Market Analysis
International: The Australian wool was
stronger for the week in the market and
Wool & Cotton Price Trends
closed higher on Au 1070c/kg. Cotton
13,000
has also increased and showed some
12,500
Weeks
recovery over the past week and closed
12,000
at US 57,74c/lb. India has made a
11,500
decision to sell fibre in the domestic
11,000
market at a time when China is going
10,500
slow on imports. This could put further
10,000
downward pressure on global prices.
9,500
India is the world’s second biggest
9,000
producer of cotton. In New Zealand,
03/10/14
07/11/14
12/12/14
16/01/15
03-15
lamb wool prices increased at auctions
Australia Wool
SA Wool
SA Cotton
in the past week due to increased *Last 3 points 3 months forecast
demand for the fibre used in clothing, as
buyers benefited from a decline in the local currency.
Wool (c/kg)


2,550
2,450
2,350
2,250
2,150
2,050
1,950
1,850
1,750
1,650
1,550
1,450
Cotton (c/kg)
Fibres Market Trends
th
Domestic: The last wool auction for 2014 took place on the 28 Jan 2015. The local market
traded lower and closed 5.21% lower than the previous sale. The market has reported good
demand for good quality wool. The next sale will be on the 04th of February. Domestic cotton
prices have increased on the back of higher international prices.
Outlook
Prices of fibre are expected to be under pressure in the short term, and this leads to the short term
outlook of decreases in prices, drawing pressure from the lower oil prices. Should demand improve,
prices might gain some support.
Fibres Market Trends
Week ending 30 Jan 2015
Wool prices
SA
(c/kg)
prices
Wool market indicator
19μ micron
21μ micron
Cotton prices
10562
11515
10801
SA
derived
Cotton
(R/kg)
Cotton Prices
17.10
Australian
prices
(SA c/kg)
9,850
11,041
10,528
New York AIndex (US$/kg)
1.48
Australian
Future Mar 2015 (AU$/kg)
11,75
11,45
New York
future Mar2015
(US$/kg)
1.32
Australian
Future Jul –
2015 (AU$/kg)
11,60
11,30
New
York
future Jul-2015
(US$/kg)
1.33
Absa Weekly Market Analysis
Vegetables Market Trends

Cabbage: Cabbage prices increased
this week by 1,8% week on week to
R3421/t. The price increase was
despite to a 10,3% increase in
volumes. Prices are expected to
continue to move sideways to upwards
in line with seasonal trends.

Carrots: Carrot prices decreased by
11,8% week on week to R2590/t. The
price decrease was due to a 15,1%
increase in the volumes of carrots.
Prices are expected to continue to
move sideways to downwards due to
higher supplies.

Onions: Onion prices decreased by
3,4% week on week to R2687/t. The price decrease was due to a 18,1% increase in volumes
compared to the previous week. Prices are expected to trade sideways due to higher supplies and
less demand after month end buying.

Potatoes: Potato prices increased by 3,0% week on week to R2519/t. The increase in prices was
despite increases in volumes of 12,2% compared to the previous week. Prices are expected to trade
sideways in the short term and continue with the downward trend weighed down by wet bags of
potatoes and the poor quality potatoes in the market.

Tomatoes: Tomato prices increased 47.9% week on week to R8324/t. The price increase was due to
a decrease in volumes of 13,9% during the past week. Prices are expected to carry on with the
upward trend supported by lower volumes as well as following seasonal trends.
Vegetable Prices: Fresh Produce Market
(Averages on the Pretoria Bloemfontein Johannesburg Cape Town and Durban markets)
Week ending
This week’s
Previous
This week’s
Previous week’s
30 January 2015
Average
week’s
Total
Total
Price (R/t)
Average
Volumes (t)
Volumes (t)
Price (R/t)
Cabbages
3421
3360
1279
1159
Carrots
2590
2938
1985
1725
Onions
2687
2782
6499
5505
Potatoes
2519
2447
13201
11767
Tomatoes
8324
5629
3379
3923
Disclaimer: Although everything has been done to
ensure the accuracy of the information, Absa Bank
takes no responsibility for actions or losses that might
occur due to the usage of this information.
Enquiries: Karabo Takadi
Analyst: Agri Info
Absa Agri-Business
E-mail: [email protected]