Bonds continued to languish in quiet noon trade on Wednesday, with little in the way of fresh news to provide any direction.
By 11.47am, the benchmark R157 bond was trading at 7.610% from 7.615% at the previous close. The R207 was bid at 8.400% and offered at 8.370% from 8.385%. The R186 was bid at 8.605% and offered at 8.590% from its previous close of 8.615%.
The rand was bid at R6.6248/$ from its previous close of R6.6307/$.
"The market is still very quiet after the holidays and generally just lacks direction at the moment," a bond trader lamented, adding that vehicle sales data for April had had no impact on the market.
Growth in new vehicle sales slowed to 8% year on year in April to 38,566 from 35,707 in a similar period in April last year, according to the National Association of Automobile Manufacturers of SA (Naamsa). In March, new vehicle sales surged 22.8% y/y.
The association said the industry's sales performance was affected by the high number and configuration of public holidays in April.
Over the same period, new passenger car sales rose 11.7% to 26,347 from 23,578, the association said.
Foreigners were net buyers of R925.913 million of bonds including repo transactions on Tuesday after net sales of R76.140 million of local bonds on Friday, Bond Exchange of South Africa statistics show. Local markets were closed on Monday for a public holiday.
Nominal cumulative volume was R173.390 billion on Tuesday from R3.036 billion on Friday.
Foreigners were net buyers of R912.291 million of bonds excluding repo transactions on Tuesday after net purchases of R103.549 million of local bonds on Friday.
For the year to date, foreigners have been net buyers of R9.210 billion worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064 billion worth of local bonds, excluding repo transactions.
For the year to date for total transactions, including repo transactions, foreigners have been net buyers of R2.239 billion of local bonds. In 2010 they bought net R44.541 billion worth of bonds.
By Gareth Vorster
The rand continued to target a sustained push below 6.60 against the greenback by midday on Wednesday, "but half-heartedly in very quiet trade", according to a local dealer.
At 11.52am local time, the rand was bid at R6.6244/$ from its previous close of R6.6307/$. It was bid at R9.8537/€ from R9.8365/€ before and at R10.9216/£ from R10.9330/£ at its previous close.
The euro was bid at $1.4875 from $1.4831 before.
A local dealer said: "The rand is targeting a break below 6.60 and has been for quite a while, but half-heartedly in very quiet trade. If it can't, then 6.67 is on the cards."
Standard Bank's currency strategist, Michael Keenan, said in a note on Wednesday morning that he foresaw a retrace to 6.73 after rand bulls had failed to sustain Monday's temporary breach of last December's four-year high of 6.55.
"Stalling precious metals prices, the lack of extended dollar weakness, this week's pull-back in local and international equity markets and yesterday's disappointing domestic data (PMI and labour) have been supportive of a weaker rand."
Meanwhile, Dow Jones Newswires reported that the euro was up a tad against the dollar. There's little to recommend the US dollar in the short term as the US Federal Reserve's monetary policy remains loose. That leads some to predict that the euro, down against the dollar in Asian trade on Wednesday, will soon recover and again test its highs.
"The fundamental positives for the dollar seem to be extremely limited indeed," said Callum Henderson, global head of currency research at Standard Chartered Bank. "Once we get through this period of consolidation, and hear from the European Central Bank and other central banks, it's back to 'sell the dollar'."
Still, not everyone is a long-term dollar bear. Jim McCaughan, CE of Principal Global Investors, said the greenback was "close to a bottom" and likely to trough as the Federal Reserve ended its quantitative easing programme, scheduled to finish in June. He said the dollar's rebound would be driven by rising US productivity and savings rates.
By Gareth Vorster
A fractionally softer rand was on the sidelines in afternoon trade on Tuesday amid volatile trading in the euro.
A local dealer noted that while the local unit would try push for 6.66 against the dollar, "it's not really a major factor at this stage". He pointed to a volatile euro, and highlighted the rand's "softening on the crosses".
At 3.44pm local time, the rand was bid at R6.6451/$ from its previous close of R6.6048/$. It was bid at R9.8303/€ from R9.7817/€ before and at R10.9279/£ from R10.9997/£ at its previous close.
The euro was bid at $1.4808 from $1.4820 before.
Meanwhile, Dow Jones Newswires reported that the dollar was higher on Tuesday, recovering somewhat from its recent drubbing as the death of Osama bin Laden put authorities across the world on heightened alert for possible reprisals from terrorist groups linked to al-Qaeda.
The mood in financial markets has soured slightly and investors are seeking out the currencies widely seen as safe havens in times of wider uncertainty, resulting in good bids for the greenback, the yen and Swiss franc.
"There is a general risk negative tone running through markets," said Adam Cole, global head of currency strategy at RBC Capital Markets, citing falls in equity futures and commodity prices, along with the sturdy demand for the dollar as trading in European markets returns to normal after the long weekend.
Analysts at Bank of America Merrill Lynch, meanwhile, noted that the death of Bin Laden was driving short-term uncertainties over the possibility of revenge attacks.
"Such risk, the known unknown, will linger and will only dissipate with time," they said in a note to clients.
That said, the demand for the dollar may start fading soon, with the European Central Bank's rate decision - due on Thursday - likely to underscore the rate differentials that favour the euro at the expense of the greenback. After all, the dollar's weakness through the year is down to loose monetary policy in the US, which is not expected to change any time soon.
By Janice Roberts
Bonds gained in thin late afternoon trade on Tuesday, following the weekly auction.
"It was the auction that mattered, as well as a slightly better rand in comparison to where the local currency was before the auction," a local bond trader said.
"But liquidity is thin - investors are still away," he added.
Earlier in the day, the SA Treasury allotted R1.3 billion worth of R204 bonds at a clearing yield of 8.380% and R800 million worth of R186 bonds at a clearing yield of 8.670%.
By 3.24pm, the benchmark R157 bond was trading at 7.610% from 7.640% at its previous close. The R207 was bid at 8.400% and offered at 8.370% from 8.410%. The R186 was trading at 8.630% and offered at 8.595% from its previous close of 8.650%.
The rand was bid at R6.6284/$ from its previous close of R6.6048/$.
Foreigners were net sellers of R76.140 million of bonds including repo transactions on Friday after net purchases of R1.519 billion million of local bonds on Thursday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was R3.036 billion on Friday from R40.435 billion on Thursday.
Foreigners were net buyers of R103.549 million of bonds excluding repo transactions on Friday after net purchases of R1.430 billion of local bonds on Thursday.
For the year to date, foreigners have been net buyers of R8.298 billion worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064 billion worth of local bonds, excluding repo transactions.
For the year to date for total transactions, including repo transactions, foreigners have been net buyers of R1.312 billion of local bonds. In 2010 they bought net R44.541 billion worth of bonds.
By Andries Mahlangu
Maize futures tracked higher on Tuesday, supported by world markets, particularly US December corn contracts during the electronic trading session.
Andrew Fletcher, a trader with Unigrain, said a softer rand against the US dollar also lent some support, as more players came back into the market after a long holiday break.
The May white maize contract lifted R25 to R1,638 per ton, the July 2011 contract gained R27 to R1,665 and the September 2011 white maize contract picked up R24 to R1,699, according to preliminary I-Net Bridge data.
The May yellow maize contract was R21 firmer at R1,690 per ton and July yellow maize garnered R16 to R1,716 per ton. The September yellow maize contract added R14 to R1,745.
The May wheat contract inched up R2 to R3,070 per ton, July wheat remained at R3,070, and the September wheat contract edged up six rand to R3,074.
At 12.00pm, when the local grains market closed, the rand was trading at R6.63/$, from R6.57/$ in the previous session.
Dow Jones Newswires reported that US corn futures fell nearly 3% on Monday, with traders trimming risk premium from the market on hope for active seedings in the western Midwest this week.
Corn for July delivery, the most actively traded contract, ended down 22 cents, or 2.9%, to $7.34 1/2 a bushel. The New crop December contract dropped 8 1/4 cents or 1.2% to $6.61 1/4.
The market erased the premium placed in prices ahead of the weekend, when weather forecasts were promoting thoughts of severe planting delays across the Midwest, said Chad Henderson, analyst with Prime Agricultural Consultants in Brookfield, Wis.
Weather remains the driving force behind price moves in corn, with drier outlooks for the western Midwest this week providing potential for a pickup in the seeding pace for a crop already being planted at half the pace of normal for this time of year.
Corn traders follow weather forecasts closely because farmers need good weather to grow a large crop to replenish precariously tight inventories projected for the end of the marketing year August 31.
Concerns about strong demand draining supplies recently pushed prices to a record high of $7.83 3/4 a bushel.
By Ray Faure
Bonds were range bound in what traders described as directionless midday trade on Tuesday.
By 12.00pm, the benchmark R157 bond was trading at 7.650% from 7.640% at its previous close.
The R207 was bid at 8.425% and offered at 8.395% from 8.410%. The R186 was trading at 8.640% and offered at 8.625% from its previous close of 8.650%.
The rand was bid at R6.6325/$ from its previous close of R6.6048/$.
Traders said the market lacked direction and was taking its cue mainly from the rand at the moment. Tuesday's weekly auction - the first in two weeks - failed to inspire any major movement, despite the fact that it was relatively well-bid.
At Tuesday's auction, the National Treasury received bids totalling R2.485 billion for R1.3 billion worth of R204 bonds and bids totalling R3.270 billion for R800 million worth of R186 bonds.
Foreigners were net sellers of R76.140 million of bonds including repo transactions on Friday after net purchases of R1.519 billion of local bonds on Thursday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was R3.036 billion on Friday from R40.435 billion on Thursday.
Foreigners were net buyers of R103.549 million of bonds excluding repo transactions on Friday after net purchases of R1.430 billion of local bonds on Thursday.
For the year to date, foreigners have been net buyers of R8.298 billion worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064 billion worth of local bonds, excluding repo transactions.
For the year to date for total transactions, including repo transactions, foreigners have been net buyers of R1.312 billion of local bonds. In 2010 they bought net R44.541 billion worth of bonds.
By Andries Mahlangu
South African maize futures ended on a firmer footing on Tuesday, boosted by higher international prices as concerns mounted over wet weather in the US delaying corn planting.
The May white maize contract gained R34 to R1,677/ton, the July 2011 contract picked up R40 to R1,708/ton and the September 2011 white maize contract added R42 to R1,741/ton.
The May yellow maize contract was R26 firmer at R1,718/ton and July yellow maize lifted R33 to R1,754/ton. The September yellow maize contract was up R28 to R1,780/ton.
The May wheat contract garnered R50 to R3,210/ton, July wheat jumped R49 to R3,223/ton, and the September wheat contract leapt R28 to R3,030/ton.
At 12pm, when the local grains market closed, the rand was trading at R6.72/$, from R6.71/$ in the previous session.
"We played catch-up today with the international markets as some traders returned to their desks following the long Easter weekend. The central theme dominating the markets currently is the potential danger on corn output posed by the delays in plantings due to wet weather," a local dealer said.
Dow Jones Newswires reported that US grain futures surged more than 3% on Monday on expectations that poor weather would prevent corn planting and reduce wheat output.
Soft red winter wheat for July delivery, the most actively traded contract, closed up 3.2% at US$8.61 1/4 a bushel at the Chicago Board of Trade. Corn for July delivery soared 3.2% to US$7.68 1/2 a bushel.
"We are now in a full-blown weather market after the three-day holiday weekend, with heavy rains seen delaying corn plantings across the Midwest while dry areas across the globe are raising concerns about global wheat production," said Benson Quinn Commodities, a brokerage in Minnesota.
Traders were worried about widening damage to wheat as forecasts offered little hope for beneficial rains in dry areas of Europe and the southern US plains, where a months-long drought had already caused crop losses ahead of the coming harvest. Conditions looked too wet in the northern US plains and Canada, raising fears farmers would not sow as much of the grain as they planned.
Traders were assessing the condition of wheat crops in the northern hemisphere after harsh weather, including a historic drought in Russia, slashed global output last year. Wheat futures soared when Russia banned exports last summer due to the drought and reached 2 1/2-year highs in February on a surge in demand. Prices have since pulled back about 8%.
Corn futures surged on concerns about the weather as well. Traders were worried that the next harvest would suffer if the crop was planted too late because late-planted corn often produces lower yields. Farmers might give up on planting corn altogether if rains kept them out of their fields for too long.
