Forge Agri Market Update

GLOBAL MARKET WEEKLY UPDATE: Market overview: This week the Rand traded sideways against the Dollar. Opening Monday at R/$16.01 However Friday morning the Rand is currently trading at R/$ 15.91. Brent crude started Monday $/vat 74.20 and currently trading $/vat 74.09 Events that moved the markets: Traders started the week focused on the outcomes of monetary policy decisions by numerous countries, but mostly towards the US Federal Reserve decisions regarding interest rate increases. US interest rates will remain at 0.25% but Federal Reserve will amplify the decline in bond purchases and advance the timeline for interest rate hikes. The Omnicron variant is present in over 60 countries with evidence that the variant is mild, however the efficiency of current vaccines is lower than against the delta variant. Inflation concerns continue as South Africa’s inflation data by Stats SA indicated the highest inflation in four and a half years. CPI rose 5.5% on an annual basis. Transport remains the driving factor behind local inflation, with fuel rising 7.1% between October and November. Reference

COMMODITY MARKET UPDATE: Maize: The market traded mixed with US maize declining earlier in the week but climbing by 1.25% and currently trading at $5.91/bu. Favourable weather in South America, export optimism by the USDA and overflow strength from the wheat markets were the drivers this week. Reference

Soybeans: US soyabean is currently trading 2.95% higher at $12.91/bu, compared to Monday’s trading session. The market has been driven up by improved soya meal prices, favourable weather in South America, overflow strength from the wheat markets, and price momentum in maize markets. Reference

Wheat: Prices fluctuated this week as prospects of global supply strengthened and the expectation of record yields in Australia drove prices down by 3.93% earlier in the week. However, prices have increased in the later part of the week as Russia indicated that they would reduce their export quote from 9 million tons. This is to ensure domestic supply as the country deals with food inflation. Export optimism and weather conditions in central US added price support. Reference

Fertilizer: The Indian Urea tender was announced. The tender will likely consume 1.5MMT of global supply during a time of limited global supply. Offers are expected to be in by Dec 23. The previous tender soled at $950/ton. Markets are watching to see if the $950 benchmark will be met, increased, or reduced. Results from this tender will indicate markets into Q1 22’ with expectations being that prices will remain high due to limited global supply. The EU natural gas prices reached another record high for the year at an equivalent of $220 per barrel of oil. These high Nitrogen feed stock prices continue to place pressure on Euopean producers, with the region currently facing several manufacturing curtailments. Reference Sanctions against Belarus have been delayed to 1 April 2022 from December 8. Extending the uncertainty of how this sanction will affect the KCL (MOP) market. Belarus KCL accounts for 1/5th of global supply. Additional concerns for the KCL market are the rising tensions between Russia and Ukraine. A US analyst indicated if a war (highly unlikely) was to occur between the two countries, 1/3rd of global supply would be removed. Reference

Locally, prices have remained stable although high for the past 3 weeks as we move into the back end of December. There are currently no fertilizer shipments being imported through Jan and Feb into South Africa as per our importers. Supplies will remain tight however inventories have been reduced by end users forward buying for the past 2-3 months