Frikkie Maré, agricultural economist at the University of the Free State, gives his monthly market overview of agricultural commodity markets.
During February, they yellow maize price continued to decrease and closed at R2 592 per ton. The good summer rains in most areas have led to a maize crop estimate of 14 million tons, and the high expected stock levels are depressing the price as a result.
The South African rand strengthened in February and closed at R13,15 against the US dollar and R13,84 against the Euro by the end of the month. It is important to note that the rand strengthened due to the fact that the dollar has depreciated, since the Trump administration needs a weaker dollar to encourage investment in the United States (US).
Producer price inflation experienced a sharp decline in January to 5,9% on a year-on-year basis, but consumer price inflation decreased by 0,2% to 6,6% year-on-year – thus remaining on par with the South African Reserve Bank’s (SARB) target of 6%.
After a period of exceptional prices for red meat, the prices of lamb, beef and mutton have started to decrease. The reason for this is that a price reduction is usually seen in February, as consumer spending power is usually lower. Moreover, consumer resistance comes into play when the price of carcasses for beef rises above R44/kg, and R70/kg for lamb.
At the last auction for February, the price of wool increased by 0,7% and traded approximately 2,2% higher than last year. Mohair prices, however, are under pressure and although the price increased by 1% at the last auction of February, the indicator price is approximately 36% lower than last year.
The producer price index (PPI) for milk decreased in January 2017, while the PPI for milk products remained virtually unchanged. On the other hand, the consumer price index (CPI) for milk, eggs and cheese indicated a sharp increase over the same period. – Market Report