#fuel – Agri Limpopo

UPDATE: A 2% increase in diesel price on the cards in November 2017

Arithmus — Tue, 24 Oct 2017 06:57:54 +0000

South African fuel prices have been on an upward trend since August 2017, mainly driven by an increase in Brent crude oil prices, as well as a relatively weaker domestic currency. Next month, a notable uptick will be on diesel price which could be up 2% from the October 2017 price, whereas petrol might only increase by a mere 0.1%. This will add pressure on farmers as it coincides with the planting period in summer rainfall areas. Also worth noting is that, for grain and oilseed, fuel makes up roughly 11% of production costs, and a notable share is utilised during planting.

Diesel (0.05% Wholesale Inland) and petrol (95 ULP Inland) prices could increase by 21 cents per litre (c/l) and 1 (c/l) respectively, on 01 November 2017. This increase could lift the wholesale diesel price to R12.33 per litre from R12.12 per litre in October 2017. At the same time, the retail price of petrol could increase to R14.02 per litre from the current level of R14.01 per litre.

This expected fuel price increase is largely driven by relatively higher Brent crude oil prices, which averaged US$56.83 a barrel this month, up by 3% from September 2017. The ZAR/USD exchange also played a major role, after weakening by 3% from the previous month, averaging R13.55 at the time of writing.

Overall, the expected uptick in diesel prices will increase farmers’ and agribusinesses’ input costs, particularly in summer crop growing areas which have recently started planting the 2017/18 production season’s crops. As we set out in our previous fuel note, the agribusinesses that operate in the transport industry will also feel the pressure on input costs due to their exposure on road transport. An example of this is maize which has more than 80% stock that is transported by road.

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UPDATE: SA fuel prices set to decline in February 2018

Arithmus — Thu, 18 Jan 2018 11:50:09 +0000

After a positive start to the year with a marginal decline in fuel prices, February 2018 could bring a further reduction in fuel prices, thanks to the stronger domestic currency. It is still early to be certain about the scale, but the current estimates suggest that prices of petrol and diesel could fall by 3% and 1%, respectively, from January 2018 levels.

From an agricultural perspective, this relief comes at a period that is characterized by reduced activity in the farms, thus lower fuel consumption. Meanwhile, agribusinesses’ could experience an increase in activity, transporting commodities across South Africa. It is worth noting that roughly 81% of maize, 76% of wheat and 69% of soybeans in South Africa are transported by road. On average, 75% of national grains and oilseeds are transported by road.

Petrol (95 ULP Inland) and Diesel (0.05% Wholesale Inland) prices could decrease by 38 cents per litre (c/l) and 19 (c/l) respectively, on 07 February 2018. This means the retail price of petrol could decline to R14.04 per litre from the current level of R14.42 per litre. At the same time, the wholesale diesel price could decrease to R12.54 per litre from R12.73 per litre in January 2018.

This expected fuel price cut is mainly driven by the ZAR/USD exchange, after strengthening by 6% from December 2017, averaging R12.35 at the time of writing. Meanwhile, the higher Brent crude oil prices have somewhat reduced the scale of the potential fuel decline. At the time of writing, the monthly oil price averaged US$68.51 per barrel, up by 7% from December 2017.

Above all, the expected decline in fuel prices will slightly ease farmers’ and agribusinesses’ input costs. While there is relatively lower activity in farmlands, agribusinesses, particularly logistics companies, will experience an increase in activity owing to an expected uptick in wheat imports, as well as exports of summer grains.

Click below to read more reports by Wandile Sihlobo

UPDATE SA fuel prices set to decline in February 2018

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South African tractor sales for March 2018 up 41% y/y

Arithmus — Thu, 12 Apr 2018 13:30:40 +0000

The South African tractor sales were up by 41% y/y in March 2018, with 726 units sold. This follows a 12% y/y contraction in February. On average, 23 tractors were sold a day last month compared to 21 tractors in February 2018 and 16 tractors a day in March 2017. Given that this is a fairly quiet period in the fields (in both summer and winter crop growing areas), the private sales were expected to have followed a normal trend, but the overall boost could be linked to government tenders ahead of the end of the financial year. The combine harvester sales were also solid, recorded a 9% y/y uptick, with 25 units sold.

The 25% y/y increase in March 2018 tractor sales came as a surprise as this is a fairly quiet period in the fields across the country. According to the South African Agricultural Machinery Association, the uptick in sales was boosted by government tenders. Therefore, we believe there will be some correction in April and sales will probably decline to levels around 441 units. Also worth noting is that March 2018 sales were the record highest for the corresponding month, in a dataset starting from 2014.
The combine harvester sales continued on a positive footing, with 25 units sold in March 2018, which is the highest figure in 15-months. This was partly supported by both the fairly stronger domestic currency, as well as expectations of a good summer grain and oilseed harvest of 14.8 million tonnes (this is down by 23% from the previous season, but better than market expectations at the start of the year).
Looking ahead, we maintain that tractor sales could see a slight downward trend over the next few months due to limited activity in the fields, as well as a bit of a correction after the government tenders. Meanwhile, the combine harvester sales could increase ahead of the summer grain harvest period.

Full report by Wandile Sihlobo available in the attachment below:

South African tractor sales for March 2018 up by 41% year on year

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SA fuel prices could reach an all-time high in June 2018

Arithmus — Mon, 28 May 2018 08:11:08 +0000

After a notable increase in fuel prices earlier this month, June 2018 could bring further uptick in fuel prices to an all-time high. This is due to higher Brent crude oil price, coupled with the relatively weaker Rand against the US Dollar. It is still early to be certain about the scale, but the current estimates suggest that prices of petrol and diesel could rise by roughly 5% and 6%, respectively, from May 2018 levels. From an agricultural perspective, this will add pressure on farmers and agribusinesses as it coincides with a high fuel consumption period — harvesting period for summer crops and a planting period for winter crops. It is worth noting that 81% of maize, 76% of wheat and 69% of soybeans in South Africa are transported by road. On average, 75% of national grain and oilseed are transported by road.

Petrol (95 ULP Inland) and Diesel (0.05% Wholesale Inland) prices could increase by 78 cents per litre (c/l) and 84 (c/l) respectively, on 06 June 2018. This means the retail price of petrol could rise to R15.75 per litre from the current level of R14.97 per litre. At the same time, the wholesale diesel price could increase to R14.16 per litre from R13.33 per litre in May 2018.
This expected fuel price upsurge is partly driven by the ZAR/USD exchange, after weakening by 4% from April 2018, averaging R12.53 this month at the time of writing. The higher Brent crude oil price is also a key factor behind the potential fuel price hikes. At the time of writing, the monthly oil price averaged US$76.77 per barrel, up by 7% from April 2018.
Above all, the expected fuel price hikes will add pressure on agribusiness and farmers, particularly for summer crop regions which have recently commenced with the harvest activity. Fuel costs make up roughly 11% of grain farmers’ production costs in South Africa. About a third of this is typically utilised during harvesting season.

Read the full report by Wandile Sihlobo below:

SA fuel prices could reach an all-time high in June 2018

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Another fuel price hike on the cards in September 2018

Deidre Carter — Fri, 24 Aug 2018 07:22:41 +0000

Following a notable increase in fuel prices over the past few months, September 2018 could bring a further uptick to an all-time high. It is still early to be certain about the scale, but the current estimates suggest that prices of petrol and diesel could rise by a percentage point, respectively, from August 2018 levels. While this fuel price increase is set to come during a relatively quiet period in the agricultural sector, farmers in the eastern parts of the country will be at the initial stages of soil preparations for the 2018/19 production season which commences around mid-October 2018. The agribusinesses that operate in the transport industry will also feel a bit of pressure on input costs due to their exposure to road transport. Roughly 81% of maize, 76% of wheat and 69% of soybeans in South Africa are transported by road. On average, 75% of national grain and oilseed are transported by road.

Petrol (95 ULP Inland) and Diesel (0.05% Wholesale Inland) prices could increase by 16 cents per litre (c/l) and 15 (c/l) respectively, on 05 September 2018. This means the retail price of petrol could rise to R16.19 per litre from the current level of R16.03 per litre. At the same time, the wholesale diesel price could increase to R14.55 per litre from R14.40 per litre in August 2018.
This expected fuel price increase is largely driven by the ZAR/USD exchange, after weakening by 5% from July 2018, averaging R14.00 this month at the time of writing. The Brent crude oil price had minimal impact this time around. At the time of writing, the monthly oil price averaged US$72.74 per barrel, down by 3% from July 2018.

Figure 1: SA retail petrol and wholesale diesel prices

Source: Central Energy Fund, Agbiz Research

Click HERE to read the full report.

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