Frikkie Maré, agricultural economist at the University of the Free State (UFS), gives his monthly market overview of agricultural commodity markets.
In November the weaker Rand supported the maize price, but as the Rand improved, the maize price declined to close at R1 985 per tonne.
In November the Rand lost ground against the Dollar and the Euro, before it gained strength again later in the month. The decline can greatly be attributed to South Africa’s downgrade in credit rating to junk status by one of the agencies, with money invested in the country consequently being moved elsewhere. However, it appears that the markets have discounted the downgrade with the Rand gaining strength a few days after the announcement. By the end of November the Rand traded at R13.71 against the Dollar and at R16.34 against the Euro.
The consumer price inflation (CPI) accelarated at a slower pace in October at 4.8% on a year-on-year (y/y) basis while the producer price inflation (PPI) also climbed slowly at 5% for the same period. Economic growth for the second quarter of 2017, indicated by the BBP, rose at 1.1% on a y/y basis. Agriculture has a positive influence on the the economic growth.
Red meat market
The price of all three grades of beef traded relatively sideways during November and closed at R45.58/kg for A2, R42.80/kg for B2 and R41.69/kg for C2. The price of A2 lamb increased while B2 and C2 grade mutton traded erratically. The prices for A2, B2 and C2 sheep carcasses traded respectively at R78.83/kg,R62.15/kg and R57.70/kg. Weaner calf prices increased sharply before declining again. Weaner lamb prices traded sideways erattically. The price of Dorper and Merino skins declined while the price of hides moved sideways.
Wool and mohair market
The indicator price for clean wool declined sharply after a good run during the 14th and 15th auctions. At the last auction, clean wool traded 3% lower than during the previous auction, but still 16.7% higher than the previous year. Mohair continued its sharp rising trend during November with the price 3.5% higher during the previous auction and 19.5% higher than a year ago.
The producer price index of milk and eggs rose sharply during October due to the increase in egg prices. The price index of dairy products decreased slightly. The consumer price index for milk, eggs and cheese increased during the same period.