Agri Trends – 23 April 2018 – Grains, Oilseeds, Livestock & Fibre

Low feed prices are positive to the livestock market

The new maize and soybean harvest exceeds expectations and will mean that it will take longer to consume the stock of maize and soybeans locally. Due to a poor rate of exports, carry stocks for old season maize by the end of April is large. Typically, exports in previous years have made a significant contribution to reducing maize stocks. Maize prices are trading low and expected to remain low in the medium term. The accumulating stocks will place downward pressure on maize prices for a longer term. Unfortunately, international maize prices are also low because the world stock for maize is also high. At this stage, we must prepare ourselves for a new season of maize to be delivered in a period that will be characterized by a strong Rand. A strong rand reduces the export price of maize.

The lower maize prices therefore meant that the cost to feed is low, thereby encouraging fattening of cattle by capitalizing on the feed margin.

Highlights

 Livestock

• Average pork prices have shown a steady declining trend since January 2018. Average pork prices have declined by between 30% and 40% during the second week of April 2018, compared to the second week of January 2018.
• 13% fewer pigs were slaughtered in February 2018 compared to January 2018. 208 118 head of pigs were slaughtered in February 2018; this is 3% lower year on year.
• 6% fewer cattle were slaughtered in February 2018 compared to January 2018. 185 262 head of cattle were slaughtered in February 2018; this is 11% lower year on year. The impact of herd rebuilding is reflective in these numbers.
• 10% fewer sheep were slaughtered in February 2018 compared to January 2018. 286 564 head of sheep were slaughtered in February 2018; this is 23% lower year on year. The impact of herd rebuilding is reflective in these numbers.

Grains & Oilseeds

• Large maize carry-over stocks, another large commercial maize crop on the way and lower prices likely to keep maize prices low in the 2018 calendar year. Slower early deliveries (due to lower prices and late-planted crops) and sluggish exports also keep maize prices on the defensive.
• The current wheat import tariff is R394.85/ton. The new calculated tariffs will be made applicable once published. It will first reduce to R294/ton then increase to R437/ton. When these newly calculated tariffs will be published remains an uncertainty.
• Weather will remain a key factor as the industry is moving closer to wheat planting season. Planting decisions will be made based on a more positive rainfall outlook to make up for the previous season’s crop losses.
• Favourable dry weather conditions forecast for the coming weeks in the sunflower seed and soybean-producing regions will likely support harvesting conditions. Soybean and sunflower seed crushing margins remain positive, pushing demand for soybeans and sunflower seed crushing.

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