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

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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.

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UPDATE SA fuel prices set to decline in February 2018

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