Soft commodities represent a better bet for 2018 than grains, Commerzbank said, cutting its forecasts for corn and wheat prices below the futures curve, while lifting expectations for the likes of coffee and sugar.

The bank cautioned that “more plentiful” world supplies of wheat, and a “less tightening” corn balance sheet, will “make it hard” for prices of the grains to rise in 2018.

Indeed, for corn, Commerzbank cut by up to $0.40 a bushel its forecast for Chicago quarter-average prices next year, pegging values in the October-to-December period at $3.70 a bushel, below the $3.84 ¾ a bushel at which the December 2018 contract was trading at on Thursday.

The bank pushed out by a year to the July-to-September quarter of 2019 the timescale for which it forecast prices returning to $4 a bushel

‘Plentiful supply situation’

For wheat, the bank cut its forecast for quarter-average prices next year by $0.40 a bushel across the board, seeing them end 2018 at about $4.60 a bushel.

The Chicago December 2018 contract was on Wednesday priced at $4.85 a bushel.

The forecasts for Paris wheat futures were cut too, by up to E10 a tonne, putting the October-to-December average at E170 a tonne, in line with the futures curve.

“The global supply situation as a whole is so plentiful that prices are likely to remain under pressure for the foreseeable future,” Commerzbank said.

“It is still too early to estimate the global balance in 2018-19, but there are no signs of any significant tightening.”

‘Significant price rise difficult’

For soybeans, the bank took a somewhat neutral rating, sticking with price forecasts which see values at $10.00 a bushel in a year’s time, a touch behind the level that November 2018 futures were priced at on Thursday.

“The supply of soybeans remains plentiful, in other words, so any significant price rise is likely to be difficult against this backdrop.

“In fact, prices are more likely to come under pressure again if the final data for South American planting give rise to the expectation of very high crops once again.”

The bank saw more prospect in oilseeds of gains in rapeseed values, trimming its forecast for Paris values in late 2018 but to E400 a tonne, above the E361.75 a tonne being priced into November 2018 futures.

“Rapeseed is likely to remain in short supply in 2017-18,” Commerzbank said, noting that for next year sowings in the EU, the top producer, were not seen expanding, and indeed had fallen in top grower Germany.

‘Optimism misplaced’

However, the most bullish calls were saved for soft commodities, such as cocoa, for which forecast for end-2018 prices in New York was lifted by $200 a tonne to $2,300 a tonne, comfortably above the $1,974 a tonne at which the December 2018 contract is currently valued.

“Lower supply coupled with robust demand is likely to give the cocoa price a boost,” the bank said, highlighting the potential for buoyant grind rates, at a time when recent price weakness has deterred growers from maximising output.

“We think that the high supply optimism which resulted in a price decrease by 10% in recent days might be disappointed.”

For raw sugar, the bank raised some of its quarter-average price forecasts by 0.5 cents a pound, although the estimate for late-2018 values was kept at 15.0 cents a pound, compared with a 14.59 cents-a-pound trading price for October 2018 futures.

“If the shift towards ethanol is maintained by Brazilian sugar mills, the proportion of sugar remaining low for any prolonged period, this is likely to shore up the price,” the bank said, while noting the small world output surplus pencilled in by some commentators for 2018-19, and forecast depreciation in the Brazilian real, as headwinds to gains.

‘Price surge’

For coffee, the bank raised its forecast for London robusta coffee prices in the October-to-December period of next year by $50 a tonne, to $1,900 a tonne, and for New York arabica coffee values by 15 cents a pound to 145 cents a pound for the same timescale.

Both were ahead of the futures curve, with November 2018 robusta coffee futures trading at $1,800 a tonne, and the December 2018 arabica contract at 133.10 cents a pound.

Commerzbank forecast that a record coffee crop in Brazil next year, as predicted by many commentators, “will probably not be achieved… given hot and dry conditions after the flowering phase” which kicked in around September.

Meanwhile, the effect of weak Brazilian exports in undermining stocks in importing countries will also support values.

In fact, “we believe that the risk is more on the upside – namely if weak export figures and unfavourable weather reports trigger a shift in sentiment”, the bank said.

Such a dynamic, “supported by reshuffling of positions on the part of short-term-oriented market participants, could cause a price surge”.

Extracted from agrimoney

Kenya has increased its maize imports from Uganda, as grain prices rise due to destruction of harvests by the ongoing heavy rains in the country.
In the last two weeks, Kenya has received close to 3,000 tonnes from Uganda through the border points, as heavy rains in the Rift Valley bread basket continue to present a threat to the new harvest.
Data from the Regional Agricultural Trade Intelligence Network (Ratin) run by the Eastern African Grain Council -- which monitors real-time cross-border grain trade -- shows that an average 700 tonnes of maize crossed into Kenya from Uganda every day last week.
Over the past three months, Kenya has been importing maize from Ethiopia and Uganda.
Last week, a 90kg bag of maize in Nairobi was trading at $34.7, double the price in Kampala, where it is $17.2. But Bujumbura has the most lucrative market, with a bag going for $56.2. In Dar es Salaam, the same bag sold at $28 while in Kigali is sold at $26
Export ban
Uganda sold about 60 tonnes to Kigali last week and 60 tonnes to Tanzania.
Data also shows importation of maize from Tanzania to Kenya through the Isebania border, in spite of a grain export ban by the Magufuli government.
Farmers in Kenya have asked for government help in drying the grain to avoid losses due to aflatoxin, which affects are up to 30 per cent of maize harvests every season.
Kenya faces a maize shortfall due the fall armyworm infestation, which destroyed about 200,000 hectares of maize, cutting production by four million bags. Agriculture Cabinet Secretary Willy Bett has warned of the likelihood of a maize flour shortage next year too.
The country imported 30,000 tonnes of the grain from Mexico, in an effort to reduce the price of maize flour -- which had reached a high of $1.8 for a 2kg pack -- and introduced subsidised maize flour.
Extracted from allafrica

Falling prices and demand for exports from the region resulting from unfavourable global economic environment pushed down East Africa's total trade - a new report has shown.
According to EAC Trade and Investment Report 2016 released this month, regional total trade declined by 19.5 per cent for the second consecutive year.
Total trade recorded last year declined to $44.6 billion (Shs161 trillion) down from $55.4 billion (Shs201 trillion) recorded the previous year.
"Total exports declined by 6.8 per cent to $14.9 billion (Shs54 trillion) from $16.0 billion (Shs58 trillion) in 2015," the report showed.
Imports into the region also fell to $29.7 billion (Shs107 trillion) in 2016, down from $39.4 billion (Shs143 trillion) recorded in 2015.
The report stated: "The fall in imports was attributed to the fall in crude oil prices that could have reduced the import bill for petroleum products."
Overall, the EAC trade deficit declined by 36.8 per cent to $14.8 billion (Shs53.7 trillion) in 2016 partly due to a fall in imports into the region.
Intra-regional trade
The total intra-EAC trade also declined to $4.2 billion (Shs15.2 trillion) in 2016.
"Intraregional trade is still low and constitutes only 9.4 per cent of total EAC trade despite the implementation of Single Customs Territory that provides for removal of tariffs and other barriers to trade among partner states," the report showed.
The study concluded that the inadequate trading regime which restricts the export of certain commodities to partner states, lack of product diversification and existence of Non-Tariff Barriers in the region have affected intra-regional trade.
While measures to attract Foreign Direct Investment (FDI) have been put in place, the level of FDI into the region is low.
"Total FDI into the region amounted to $6.7 billion (Shs24.1 trillion) in 2016, has averaged about $6.9 billion (Shs25 trillion) over the last three years and was mainly concentrated in the extractives sector which does not provide much in terms of employment," the report noted.
FDI into the EAC grew modestly due to increased investment inflows into Tanzania and Uganda during the year.
The report showed: "Nevertheless, the level of FDI into EAC is still low as a percentage of global FDI inflows despite progress in creation of more conducive investment climate in the partner states."
The low level of FDI inflows was mainly attributed to the lack of effective markets due to low per capita income, structural and institutional challenges that make the EAC less attractive to investors.
Experts views
So what needs to be done to change the declining regional trade?
Mr Aly Khan Satchu, a Nairobi- based financial analyst with focus on East Africa, says there is need to open the borders.
"There has been plenty of back-sliding and friction in this area. Rwanda is a Lode Star and the rest of the EAC would do well to embrace complete free movement of people which is in fact our most valuable asset."
He adds that both Tanzania and Kenya -the two elephants in the EAC room- have seen serious liquidity issues.
"Private Sector credit growth is at or close to 0 per cent in both economies and this has been a big weight on EAC trade," he explained.
Mr Gideon Badagawa, the executive director Private Sector Foundation Uganda (PSFU) responding to what the region should do to address the situation, said: "We need to address the Non-Tariff Barriers challenge so that goods can move easily and swiftly."
Giving an example of Kenya continuing to block Uganda's sugar imports is a non- tariff which would have otherwise promoted trade between both countries.
"Rwanda imports cheaper construction materials and sugar from sources outside the region. Why? Because they reduce the tariffs as they would pay full scale if they sourced from within EAC," he added.
Extracted from allafrica

Our African cotton producers — Benin, Burkina Faso, Chad and Mali, known as the Cotton Four — urged WTO members to increase assistance for enhancing cotton production, improving local processing capacity and developing cotton-to-textile value chains in Africa and to curb domestic support to the cotton sector, during the latest WTO “Cotton Day” on 17 November.
The discussions included a session of the Director-General’s Consultative Framework Mechanism on Cotton, which deals with the development assistance aspects of cotton, chaired by Deputy Director-General Alan Wolff, and a dedicated meeting to review trade-related developments in the cotton sector. A new cotton portal, developed by the WTO and the International Trade Centre (ITC) and to be launched officially during the WTO's Ministerial Conference in Buenos Aires on 11 December 2017, was presented to WTO members.
Cotton roadmap
The Cotton Four (C4) presented the “ Cotton Roadmap Project”, which seeks to promote the cotton sector by improving the local processing capacity and developing cotton-to-textile value chains at the regional level. The objectives of the project, developed by the C4 in cooperation with the ITC, reach beyond the C4 region and encompass the Western and Central African sub region, Benin noted on behalf of the C4.
This new initiative includes impact indicators covering local processing capacity, aimed at creating a robust and competitive cotton-based industry in Africa. Some WTO members provided substantive feedback on the project while others promised to consult with their capitals for further analysis. The project proponents called on donors to provide more assistance to implement more ambitious cotton development strategies. They also stressed the need to attract private investment to match the provision of development assistance funds.
The Executive Director of the International Cotton Advisory Committee (ICAC), Mr Kai Hughes, gave a presentation on African cotton production and its interplay with poverty reduction strategies. He stressed the importance of increasing cotton yield in Africa: “If we want to make a difference in Africa, it boils down to how we should increase cotton yield,” he said. Mr Hughes also stressed the role of cotton as a driver of economic growth and its contribution to food security and socio-economic and environmental sustainability.
The Agriculture and Commodities Division of the WTO presented the latest “evolving table” on cotton development assistance: a unique transparency-enhancing tool used to monitor the implementation status of development assistance projects in the cotton sector and for agriculture in general.
In a cover note accompanying the evolving table, Director-General Roberto Azevêdo noted that the number of projects in the cotton-specific sector has remained stable, and that the total value of commitments stands at US$ 203.6 million, of which US$ 113.7 million has already been disbursed. The ratio of total disbursements to total commitments is at 55.8%, slightly higher than the previous period.
Agricultural trade reform
The chairperson of the agriculture negotiations, Ambassador Karau of Kenya, updated members on the state of play of the negotiations on cotton leading up to the WTO's 11th Ministerial Conference (MC11) in Buenos Aires.
“Cotton clearly remains a priority for MC11,” he told members, noting that ministers agreed 12 years ago, at the 2005 Hong Kong Ministerial Conference, that cotton will be addressed “ambitiously, expeditiously and specifically within the agriculture negotiations”.
“Each one of the words in this sentence is important. It gives cotton a special status in our negotiation,” the chair said, while noting that the negotiations on cotton do not take place in isolation from what is happening in agriculture more broadly.
Ambassador Karau noted that domestic support in cotton remains the central and most controversial issue, and the views remain far apart on what could constitute a possible outcome in this area.
The Ambassador of Mali, speaking on behalf of the C4, called on members to step up their negotiation efforts to reach an outcome on cotton at MC11. He stressed that growth in the cotton sector contributes to a number of sustainable development goals and benefits millions of poor farmers in Africa. Pointing to the trend of lower global cotton prices and the declining production in many parts of cotton-producing countries in Africa, both the C4 and Pakistan underlined the need for WTO members to curb domestic support in cotton so as to level the playing field for cotton producers.

Cotton Portal
Members benefitted from a presentation of the Cotton Portal developed by the WTO and ITC, to be launched officially in Buenos Aires on 11 December 2017.
The Cotton Portal will provide a single entry point for all cotton-specific information available in WTO and ITC databases on market access, trade statistics, country-specific business contacts and development assistance-related information as well as links to relevant documents, webpages and other organizations active in the cotton sector.
Ambassador Karau noted that the Cotton Portal project was an excellent initiative that would contribute to improving the quality and accessibility of information related to cotton market access as well as to relevant information for the cotton-related daily activities of both private operators and officials.
He also highlighted the fact that it would in particular facilitate the monitoring of the implementation by members of the market access paragraphs contained in the Nairobi Ministerial Decision on Cotton.
“We should all be proud of this Cotton Portal, which constitutes a very positive outcome resulting from our cotton-related work,” he concluded.
Cotton trade policy and market situation
Members heard a report on the latest trade policies, compiled in a WTO Secretariat background document. This document provides updated information on cotton based on new notifications, and includes new tables showing export volumes and share of world exports for major cotton exporters.
Agriculture negotiations chair, Ambassador Karau, stressed the importance of having up-to-date data on members' policies and support levels, especially in terms of domestic support. “External information is useful but these data must come first and foremost from your notifications,” he told WTO members.
In a presentation on recent developments in the cotton market, Mr Kai Hughes of ICAC noted that cotton planted areas have increased in recent years and cotton yields have also been increasing in many regions. As a result, world cotton production is slightly above cotton mill use; global stocks are therefore not likely to decline. He also noted that although the subsidies provided to cotton producers worldwide have been declining, it is still claimed that a majority of cotton production receives direct assistance.
There is a strong negative correlation between direct assistance to cotton production and prices, Mr Hughes remarked. He concluded his presentation by updating members on work related to e-Phyto – electronic phytosanitary certificates – noting its key relevance to trade in cotton and its derivative products.
Extracted from WTO

South Africa exports to Kenya grew by Ksh11 billion ($106.4 million) in the first eight months of the year that saw Africa's most industrialized economy overtake the United States in sales to Kenya.
South Africa sold goods worth Ksh42.7 billion ($413.1 million) to Nairobi in the eight-month period, a 34 per cent growth from Ksh31.7 billion ($306.7 million) in a similar period a year earlier.
The faster growth in sales saw Pretoria displace the US to emerge sixth biggest seller of commodities to Kenya.
South Africa is the most industrialized and diverse economy in the continent and is the top seller to Kenya among African countries.
It sells to Nairobi goods such as wines and other alcoholic drinks, cars as well as spare parts, oil lubricants and machinery.
Imports from the US grew to Ksh40.2 billion ($388.9 million) in the eight-month window, from Ksh34.2 billion ($330.9 million), slipping one position behind South Africa on Nairobi's import table, data from Kenya National Bureau of Statistics (KNBS) shows.
But Kenya's exports to South Africa remain paltry, at less than Ksh5 billion ($48.3 million) in the period with the country not featuring among the top 11 buyers of goods from Nairobi, the KNBS data shows.
South African companies with operations in Kenya include MultiChoice, SABMiller, and Massmart (Game brand) while thousands of Kenyans are frequent travellers to South Africa for business and leisure.
Kenya has long expressed discomfort with the many hurdles its citizens travelling to South Africa continue to face with little response from Pretoria.
Ideally, Kenya and South Africa are supposed to be dealing with each other under the principle of reciprocity -- meaning that benefits extended by one country are mirrored by the other.
The KNBS data shows China remains the biggest seller of goods to Nairobi, having shipped in Ksh273 billion ($2.6 billion) worth of goods in the year to August, ahead of second-placed India ($1.2 billion).
Extracted from allafrica