Frikkie Maré, agricultural economist at the University of the Free State (UFS), gives his monthly market overview of agricultural commodity markets.
During December the price of yellow maize declined as the Rand increased in strength, but was not affected as much as expected. This can be attributed to the fact that many of the maize producing areas have not been planted yet due to a lack of rain; thus a smaller harvest is to be expected. The price closed at R1934 per tonne.
In December the Rand gained ground against the Dollar and the Euro. This can be attributed to the positive reaction on markets after Cyril Ramaphosa was elected as the ANC president. By the end of December, the Rand traded at R12,37 against the Dollar and R14,82 against the Euro. Consumer price inflation (CPI) slowed down during November to 4.6% on a year-on-year (y/y) basis. Producer Price Inflation (PPI) increased to 5.1% during the same period. Economic growth for the third quarter, as represented by GDP, increased 0.8% y/y. Once again agriculture contributed positively to this growth as was seen in the second quarter.
Red meat market
The price of A grade and C grade beef decreased at the end of December while the price of B grade beef increased. Prices closed at the end of December at R47.87/kg for A2, R44.90/kg for B2 and R43.61/kg for C2. Mutton showed the same trend as beef with the price for A2, B2 and C2 sheep carcasses closing at R83.92/kg, R65.63/kg and R61.46/kg respectively. Prices for weaner animals (calves and lambs) increased slightly and then traded sideways. For Dorper and Merino skins prices traded sideways while the price of hides decreased.
Wool and mohair market
The indicator price for clean wool increased by 0.6% during the only auction in December compared to the previous auction and traded 21.7% higher than the previous year. Mohair prices traded sideways with the price remaining unchanged compared to the previous auction and 20.9% higher than last year.
The producer price index of milk and eggs increased sharply during November due to the price increase for eggs. The price index of dairy moved sideways. The consumer price index of milk, eggs and cheese increased slightly during the same time. – Market Report