Food inflation decelerated to 6.8% y/y in July 2017, from 6.9% y/y in the previous month. This mirrors the benefits of the higher agricultural output following good summer rainfall across the country.

Although we expect further moderation in the next few months, the picture of the food basket is mixed. Most food products have decelerated, with the exception of meat which is proving stickier than expected, recording 14.4% y/y in July, which is the highest level since December 2011. This is on the back of an outbreak of avian influenza and cattle restocking process after the 2015-16 drought.

Click here to read full report.

The post SA food inflation falls marginally. appeared first on Agri Limpopo.

The deceleration in headline food inflation is due to the robust recovery in agricultural production. The 2017 total summer grain and oilseed harvest is estimated at 19.9 million tonnes, which is double the previous season’s volume . This has led to a widespread decline in agricultural commodity prices. For example, white maize spot price currently trades at levels around R1 876 tonnes, which is 45% lower than the same period last year. Yellow maize spot price is trading at levels around R1 974 per tonne, which is a 38% year-on-year decline.

As we set out in our note on 20 September 2017, the spreading of avian influenza remains a key risk in meat inflation because of poultry’s higher weighting. Poultry accounts for a 14% share of the overall food basket, meanwhile beef accounts for an 8% share. In terms of livestock, the recent data from the Red Meat Levy Admin shows that farmers slaughtered 228 632 head of cattle in August 2017, up by 12% from the previous month, but still down by 5% from the corresponding period last year. This suggests some levels of normalisation.

Looking ahead – there are positive prospects regarding the upcoming summer crop production season, with the South African Weather Service forecasting widespread rainfall between November 2017 and February 2018. Overall, this should keep agricultural commodity prices at relatively lower levels for some time.

Click below to read more recent reports by Wandile Sihlobo.

SA food price inflation decelerates to the lowest level in 22 months

The post UPDATE: SA food price inflation decelerates to the lowest level in 22 months appeared first on Agri Limpopo.

As we set out in our note on 28 September 2017, the broad deceleration in food producer inflation is due to a robust summer crop harvest, as well as improving slaughtering activity, particularly cattle and sheep.  

Meat and meat products price inflation eased to 16.5% y/y in September 2017, from 16.8% y/y in the previous month. This was largely driven by the improvement in cattle and sheep slaughtering activity. About 228 632 head of cattle were slaughtered in August 2017, up by 12% from the previous month.  At the same time, 374 838 head of sheep, which is an 11% monthly uptick.

For now, it is unclear whether this will be a temporary blip or a continuous recovery. We will get more clarity tomorrow, 27 October 2017, when the Red Meat Levy Admin releases the figures for September 2017. Within the meat and meat products basket, the spread of avian influenza remains a major concern, although it has, so far, largely affected layers for egg production. 

A slight uptick in dairy products price inflation to 1.7% y/y in September 2017 came as no surprise. It is merely a reflection of seasonal trends. We expect dairy products inflation to soften in the coming months, in anticipation for improvement in grazing veld and milk production during the summer rainfall season.

Apart from avian influenza, large agricultural output and positive prospects for the new summer crop season will keep commodity prices under pressure over the short-to-medium term, which should contain food products’ inflation at relatively lower levels.   

Click below to read more recent reports by Wandile Sihlobo.

PPI UPDATE: SA food products price inflation slows to 1.3% year on year

The post PPI UPDATE: SA food products price inflation slows to 1.3% y/y appeared first on Agri Limpopo.

The deceleration in headline food inflation is largely due to lower agricultural commodity prices, following a good harvest in 2016/17 production season. Encouragingly, farmers intend to increase the summer crop  area plantings for the 2017/18 production season by 1% y/y to 4.03 million hectares. Additionally, the weather outlook for the upcoming summer season is favourable, which increases a possibility of yet another good crop.

Avian influenza, which has been spreading across the country, has largely affected egg layers. Data from the South African Poultry Association shows that approximately 4.8 million birds have been culled or died due to the spread of avian influenza. However, broilers for meat only constituted 8% of the culled birds. Surprisingly, eggs price inflation only increased by 0.5% m/m and 2.7 y/y in October 2017.

After showing a 12% m/m uptick in August 2017, the cattle slaughtering activity declined by 12% m/m in September 2017, with 209 322 head of cattle slaughtered, according to data from the Red Meat Levy Admin.  While this is not the only driver, it does add to the increase in general meat price inflation.

Overall, we expect food price inflation to remain at relatively lower levels for some time due to promising upcoming production season and expected a recovery in the livestock industry.

Click below to read more recent reports by Wandile Sihlobo.

SA Food Price Inflation Decelerates

The post SA food price inflation decelerates appeared first on Agri Limpopo.

The grain mill products, starches, sugar, oil and fats are still in deflation, after registering -17.6% y/y,-10.7% y/y, -13.2% y/y and -1.7% y/y, respectively, last month, owing to a good harvest in the 2016/17 summer production season.  Meanwhile, the 0.4% m/m uptick in fruit and vegetable inflation is somewhat reflective of the expected lower harvest in the Western Cape province due to the ongoing drought.

Meat and meat products inflation could continue to decelerate owing to an expected increase in supply – set to be boosted by anticipated uptick in slaughtering activity ahead of the festive season, as well as improving agricultural conditions. The dairy products inflation slowed by 0.5% m/m in October and likely to maintain this trend due to an expected increase in milk production during the summer season when grazing veld recovers.

As we set out in our note on 22 November 2017, while fears of avian influenza have not completely dissipated, the impact has largely been on egg layers. Broilers, which contribute to meat production, were roughly 8% of the 4.8 million birds’ culled thus far, according to data from the South African Poultry Association.

Overall, we expect food products’ price inflation to be contained at relatively lower levels for some time due to promising summer crop production in the new season and expected a recovery in the livestock industry.

Click below to read more recent reports by Wandile Sihlobo.

SA food products price inflation decelerates to 0.4% year on year

The post SA food products price inflation decelerates to 0.4% y/y in October appeared first on Agri Limpopo.

• 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%

The post SA food and non-alcoholic beverages price inflation decelerates further to 3.5% appeared first on Agri Limpopo.

Read the full report by Wandile Sihlobo below:

South African Agricultural Commodities Weekly Wrap 04 May 2018

The post South African Agricultural Commodities Weekly Wrap appeared first on Agri Limpopo.

• 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

The post SA food price inflation ticked up slightly to 3.9% y/y in April 2018 appeared first on Agri Limpopo.