Frikkie Maré, agricultural economist at the University of the Free State (UFS), gives his monthly market overview of agricultural commodity markets.
In October the price of yellow maize increased slightly to close at R2 080/tonne. The price increase can be attributed to the weaker Rand supporting wheat prices.
The Rand lost strength against the Dollar and the Euro due to the Minister of Finance’s medium term budget speech that was not received well by international communities. Towards the end of October the Rand traded R14,13 against the Dollar and R16, 45 against the Euro. Consumer price inflation (CPI) increased at a faster pace in September at 5.1% year-on-year (y/y). Producer price inflation (PPI) also increased faster at 5.2%. Economic growth in the second quarter of 2017, as represented by GDP, increased by 1.1% on a y/y basis. Agriculture contibuted positively to this growth.
Red meat market
Beef prices traded sideways in October, especially for B and C grades. The price of B2 beef closed at R43.15/kg and R41.45/kg for C2. A grade beef prices were erratic and declined slightly to close at R45.83/kg. The prices of A2 and B2 grade mutton decreased while C2 carcasses increased. A2, B2 and C2 mutton carcasses closed at R77.00/kg, R57.95/kg and R59.24/k, respectively. Weaner calf prices traded sideways with lamb increasing. Dorper hides traded sideways and Merino hides traded erratically. Overall, the prices of hides has continued to show a downward trend in the past few weeks.
Wool and mohair
The price of clean wool increased further in October at the tenth auction of the season and traded 1.6% higher than the previous auction. The indicator price is 16.4% higher than the previous year. Mohair prices also increased with prices 5.2% higher than the previous auction and 9.2% higher than last year.
The producer price index of milk, eggs and dairy increased in September. The sharp increase in the producer price of milk and eggs can be attributed to the current bird flu that limits stock. The consumer price index of milk, eggs and dairy also increased slightly during the same period.