food inflation – Agri Limpopo

SA food and non-alcoholic price inflation decelerates further to 4.5%

Deidre Carter — Wed, 21 Feb 2018 13:30:15 +0000

Food and non-alcoholic beverages inflation have been on a downward trend since mid-2017, following a robust output from the agricultural sector. In January 2018, food inflation further decelerated to 4.5% y/y, which is the lowest levels in more than two years. With that said, the food basket remains mixed. The livestock products (meat, milk, eggs and cheese) are slightly elevated, whereas the rest is on a slowing path. We expect this trend to persist in the comings months cushioned by large grain stock from the 2016/17 production season, and expectations of a good harvest in the summer crop growing areas.

While the summer grain and oilseed season started on a bad footing, characterised by drier conditions in some sections of the Free State and North West, the recent showers have now improved the crop growing conditions across the country. As a result, we forecast South Africa’s 2017/18 maize production at 11.2 million tonnes, which is well above the annual consumption of 10.5 million tonnes. Moreover, there will be large carryover stock of 4.2 million tonnes from the current marketing year, which will boost South Africa’s maize supplies in the 2018/19 marketing year that commences in May 2018. All this bodes well for food inflation.

Meat price inflation slowed to 13.4% y/y in January 2018, from 14.0% y/y in December 2017. This comes after cattle slaughtering activity increased by 10% m/m to 262 727 head of cattle in December 2017.

The Western Cape drought has resulted to a notable decline in wheat production, but we do not foresee that playing a significant role in food price inflation as South Africa is already a net importer of wheat, with prices trading along import parity levels. Moreover, the recent 45% decline in wheat import tariff to R394.85 per tonne also bodes well for food inflation for the coming months.

Overall, the relatively large grain stock from the previous season, expectations of a good harvest in the summer crop growing areas of the country, a recovery in the sugar belt, a decline in wheat import tariff, and normalisation in livestock slaughtering activity could contain food inflation at fairly lower levels in the coming months.

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SA food price inflation decelerates further to 4.5%

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SA food and non-alcoholic beverages price inflation decelerates further to 3.5%

Arithmus — Wed, 18 Apr 2018 11:13:40 +0000

Food and non-alcoholic beverages inflation decelerated to 3.5% in March 2018, from 3.9% in the previous month. This is the lowest levels since December 2013 – thanks to last season’s robust crop output, as well as deceleration in meat price inflation. While there might be a slight uptick in the coming months in anticipation of the VAT and sugar tax effect, we expect the food and non-alcoholic beverages price inflation to remain at fairly low levels this year cushioned by a large grain stock from the current marketing year, as well as the expectation of a fairly good summer grain harvest.

One of the products that are in deflation within the food basket is bread and cereals, falling 4.8% y/y in March 2018. This is likely to be the key theme over the next couple of months as South Africa is set for another good crop harvest, albeit being lower than the 2016/17 production season. The latest estimates point to 12.42 million tonnes of maize this production season, which is well above the annual consumption of 10.5 million tonnes. There will be large carryover stocks of 4.1 million tonnes from the current marketing year, which will boost South Africa’s maize supplies in the 2018/19 marketing year that commences in May 2018. All this will keep maize prices at fairly lower levels, which bodes well for food inflation. Moreover, the recent 45% decline in wheat import tariff to R394.85 per tonne also bodes well for food inflation for the coming months..
Meat price inflation slowed to 10.0% y/y in March 2018, from 11.4% y/y in the previous month. While a welcome development, the ongoing cattle and sheep heard rebuilding process following drought conditions could keep meat prices at relatively higher levels compared to other products. Data from the Red Meat Levy Admin shows that farmers slaughtered 185 262 head of cattle and 286 564 head of sheep in February 2018, which is 11% and 23% lower than the corresponding period last year.
On balance, the relatively large grain supplies, a recovery in the sugar belt and a decline in wheat import tariff could contain food inflation at fairly lower levels in the coming months.

Read full report by Wandile Sihlobo in attachment below:

SA food price inflation decelerates further to 3.5%

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SA food price inflation ticked up slightly to 3.9% y/y in April 2018

Arithmus — Mon, 28 May 2018 13:49:51 +0000

Food and non-alcoholic beverages inflation marginally ticked up to 3.9% in April 2018, from 3.5% in the previous month. The uptick was largely on the non-alcoholic beverages, particularly soft drinks, on the back of the introduction of the sugar tax in April 2018. Meanwhile, food products within the basket generally softened due to relatively lower agricultural commodity prices, which in turn, were the reflection of large supplies. Also worth noting is a deceleration in meat price inflation which is partly underpinned by fairly lower pork prices, as well as an increase in monthly cattle slaughtering activity.

The overall non-alcoholic beverages inflation was at 5.3% in April from 2.5% in the previous month. Within this category, the uptick was largely on cold beverages, which accelerated to 6.1% in April from 2.1% in the previous month. Meanwhile, hot beverages ticked up to 3.8% from 3.3% in March 2018. This shows that the overall uptick in the non-alcoholic beverages category was partly driven by the sugar tax since this is a biggest monthly jump this year, coinciding with the implementation of the tax on 01 of April 2018.
One of the products that are in deflation within the food basket is bread and cereals, falling 3.7% y/y in April 2018. This is likely to be the key theme over the next couple of months due to expectations of large maize supplies of 16.4 million tonnes this year, well above South Africa’s annual consumption of 10.7 million tonnes.
Meat price inflation slowed to 9.0% y/y in April 2018, from 10.0% y/y in the previous month. This downward trend could be sustained as cattle slaughtering activity is expected to gain momentum. The United States Department of Agriculture suggests that the number of cattle to be slaughtered in 2018 could increase by 4.0% from the previous year to 3.5 million head following a general recovery in the industry performance.
While the introduction of new taxes presents upward pressures, the relatively large domestic grain and global sugar supplies, combined with the expected increase in cattle slaughtering activity could still contain food inflation at fairly lower levels in the coming months.

Read the full report by Wandile Sihlobo below:

SA food price inflation ticked up slightly to 3.9% year on year in April 2018

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