South Africa Corn Acres Expanding
South African corn farmers are projected to have planted 10% more hectares due to favorable weather conditions.
South Africa produces both white and yellow corn.
Farmers are estimated to have planted 2.535 million hectares, or 6.26 million acres of corn this year compared to the 2.3 million hectares, or 5.6 million acres, of corn planted last season.
A majority of South Africa’s corn acres are white corn.
South Africa’s wheat crop is expected to increase to 1.618 million tons, or 59.4 million bushels.
FBN’s Take On What It Means: Given that South Africa is a small producer and exporter of corn and wheat, we believe that there are some ramifications for the global end user of corn. Last week, South Korea purchased option origin corn from South Africa, Ukraine and the U.S. What was interesting to us is that South Korea has purchased some feed corn from South Africa this year. We believe that while South Africa is a small player in the global corn trade, the fact that South Korea purchased option origin corn from the country is a negative for the U.S. export program.
JBS Inks Big Deal to Supply China with Protein
Brazil meatpacker JBS signed a memorandum of understanding with Hong Kong's WH Group to supply up to 3 billion reals ($717.26 million) of fresh beef, poultry and pork per year to the Chinese market.
The first shipments under the agreement are expected to take place in the first quarter of 2020.
Details about the country of origin are murky. It is believed that JBS will be exporting a bulk of the pork and poultry from Brazil and the U.S.
In 2019, Brazil was the world’s largest exporter of poultry.
JBS is the world’s largest protein company.
JBS owns and operates cattle, hog and broiler processing facilities in Brazil, US, Australia and other countries.
In the US, JBS, also known as JBS-Swift,owns a majority stake in the poultry processor Pilgrim’s Pride.
WH Group is a Chinese protein company that purchased Smithfield Foods in 2016.
FBN’s Take On What It Means: We believe that the JBS sale could be a positive for the U.S. farmer. Because JBS has material presence in Brazil and the U.S. we believe that despite a lack of information about the country of origin for the exports it seems probable that JBS could leverage the U.S. packing facilities to help achieve the volume.
The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)
