#inflation – Agri Limpopo

PPI UPDATE: SA food products price inflation slows to 1.3% y/y

Arithmus — Thu, 26 Oct 2017 12:29:11 +0000

Food products’ price inflation eased to 1.3% y/y in September 2017, from 1.9% y/y in the previous month. The deceleration was broad-based, with the exception of dairy products which inched up from the previous month. Meat and meat products’ inflation, which has been the key driver of the headline inflation for some time, also eased. This reflects an improvement in livestock slaughtering activity. However, there are still risks associated with the spread of avian influenza albeit having affected a relatively small share of broilers at the moment, with impact more pronounced on the layers.

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.

Decline in cattle, sheep and pig slaughtering activity

Arithmus — Fri, 13 Apr 2018 08:25:08 +0000

The 2015-16 drought led to higher slaughtering activity in livestock industry (cattle, pigs and sheep) as farmers struggled to feed their stock amid higher feed costs, coupled with drier pastures. With the drought now behind us (with the exception of the Western Cape province), farmers have started rebuilding their herds. Moreover, the relatively lower maize and soybean prices, as well as a good recovery in pastures have provided a conducive environment for the livestock rebuilding process. This, however, has led to a decline in slaughtering activity in almost all the aforementioned sub sectors (see Chart below).
Data from the Red Meat Levy shows that cattle slaughtering activity softened by 5% month-on-month (m/m) and 11% year-on-year (y/y) in February 2018, with 185 262 head of cattle slaughtered. In the same month, sheep slaughtering activity declined by 10% m/m and 23% y/y, with 286 564 head of sheep. Moreover, pigs slaughtering also soften by 13% m/m and 3% y/y, with 208 118 head slaughtered.
Above all, these slaughtering dynamics partially explain why meat inflation remained stickier in 2017. This year’s meat price inflation will again partially be influenced by the path of this slaughtering activity. We will monitor the developments over the coming months in order to see if the current trend persists for longer or shows improvement, and thereafter ascertain the impact on prices.

Source: Red Meat Levy Admin, Agbiz Research

Full report by Wandile Sihlobo available in the attachment below:

South African Agricultural Commodities Weekly Wrap 13 April 2018

The post Decline in cattle, sheep and pig slaughtering activity appeared first on Agri Limpopo.

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%

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

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

The post SA fuel prices could reach an all-time high in June 2018 appeared first on Agri Limpopo.

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

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

Food and non-alcoholic beverages inflation remain unchanged in June 2018 at 3.4% y/y

Deidre Carter — Wed, 18 Jul 2018 12:37:37 +0000

South Africa’s food and non-alcoholic beverages inflation remain unchanged in June 2018 at 3.4% y/y.

Keeping inflation at fairly lower levels are bread and cereals (-3.1% y/y), fruit (-3.2% y/y), oil and fats (-1.2%), sugar, sweets and desserts (-5.3% y/y), which are still in deflation. This is underpinned by the large agricultural output from the previous and current season which have moderated agricultural commodity prices.
Meat price inflation, which has been rising in the past couple of months, also decelerated to 6.8% y/y in June, from 7.8% y/y in May. This is partially driven by the uptick in cattle slaughtering activity. South African farmers slaughtered 219 434 head of cattle in May 2018, up by 11% from the previous month, according to data from the Red Meat Levy Admin.
In the near to medium term, we expect food price inflation to remain at relatively lower levels due to large agricultural output.

Figure 1: South Africa’s food and non-alcoholic beverages inflation (per product)

The post Food and non-alcoholic beverages inflation remain unchanged in June 2018 at 3.4% y/y appeared first on Agri Limpopo.

SA food and non-alcoholic beverages inflation unchanged

Deidre Carter — Thu, 23 Aug 2018 08:58:27 +0000

South Africa’s food and non-alcoholic beverages price inflation remain unchanged for a third consecutive month, at 3.4% y/y in July 2018. Similar to the previous months, most food products inflation within the basket generally softened due to lower agricultural commodity prices, which in turn, were a reflection of available large supplies. The deceleration in meat price inflation was largely underpinned by lower pork prices. The only food category that showed a notable uptick was milk, eggs and cheese, which was partly due to the effects of avian influenza in South Africa’s egg-laying flock.

One of the products that are in deflation within the food basket is bread and cereals, falling 3.0% y/y in July 2018. This is likely to be the key theme throughout the year due to expectations of large maize supplies of 16.7 million tonnes in 2018/19 marketing year, well above South Africa’s annual consumption of 10.8 million tonnes.
Meat price inflation, which remained elevated for some time in the past couple of months, slowed to 5.6% y/y in July 2018, from 6.8% y/y in the previous month due to lower pork prices. While cattle slaughtering declined by 13% m/m in June 2018 to 190 454 head, the outlook for the rest of the year is positive. The United States Department of Agriculture suggests that the number of cattle to be slaughtered in South Africa in 2018 could increase by 4.0% y/y to 3.5 million head following a general recovery in the industry performance. This potential uptick in beef slaughtering could contain meat price inflation at fairly lower levels for some time.
As noted in the introductory section, milk, eggs and cheese was the only food category (aside from beverages) that registered a notable uptick of 4.2% y/y in July 2018 from 3.8% in June 2018. Nonetheless, this could be short-lived as expected egg imports from the US and Lesotho will supplement local supplies.
Overall, food price inflation could average around 5.2% y/y this year. Looking ahead, the key risk in the medium term is the expected El Niño event towards the end of this year, heading into 2019, which could negatively affect the new season summer crop. There will be more clarity about this in a month’s time or so.

Click HERE to read the full report.

The post SA food and non-alcoholic beverages inflation unchanged appeared first on Agri Limpopo.

SA food and non-alcoholic beverages inflation unchanged in January 2019

Arithmus — Wed, 20 Feb 2019 14:37:18 +0000

South Africa’s food and non-alcoholic beverages inflation remained unchanged in January 2019 at 3.0% y/y. But we think going forward there will be upside pressures which will emanate from a general increase in agricultural commodity prices, albeit having slowed somewhat from levels seen at the start of the year. The increases will, however, not be steep due to expectations of a decline in meat prices. We think South Africa’s food and non-alcoholic beverages inflation could average about 5% y/y in 2019.
Figures released this morning by Statistics South Africa show that food and non-alcoholic beverages inflation remained unchanged, at 3.0% y/y in January 2019. But the products price inflation movements within the basket were mixed. (See Figure 1). Bread and cereals; fish; vegetables; and non-alcoholic beverages, lifted from the previous month, whilst, meat; milk, eggs and cheese; sugar, sweets and desserts; and other foods price inflation slowed.
To highlight the key products – the deceleration in meat price inflation was partly driven by an increase in slaughtering activity, specifically sheep and cattle subsectors. South African farmers slaughtered 258 697 head of cattle in December 2018, up by 12% from the previous month and 8% from the corresponding period last year. In addition, about 547 952 head of sheep were slaughtered, up by 23% from the previous month, but still a percentage point lower than December 2017. Moreover, meat prices, which account for more than a third of the food inflation basket, are likely to be under pressure in the near term. This is due to expectations of an increase in domestic meat supplies as the recent outbreak of foot-and-mouth disease has led to a ban on South African red meat in key export markets.
In terms of grains and cereals, while the production season started on a bad footing and prices increased notably in January 2019, there has been some improvement in the recent weeks. Crop conditions have generally improved across the country following good rains in the first two weeks of February. The impact of improved weather conditions is illustrated by a widespread decline in SAFEX grain and oilseed prices from levels seen last month. Be that as it may, there is still uncertainty about the potential size of the maize crop. The estimates in the market currently vary between 10.5 and 11.3 million tonnes, which would make the country self-sufficient in the 2019/20 marketing year, when we account for an opening stock. There will be more clarity on this as the season progresses.

Click HERE for the full report.

Sourced: Agbiz, Agribusiness Research

The post SA food and non-alcoholic beverages inflation unchanged in January 2019 appeared first on Agri Limpopo.