Agri Trends – 8 June 2018 – Grains, livestock, fibre

Agri GDP declines by 24.2 quarter on quarter

South Africa’s gross domestic product (GDP) growth rate declined by 2,2%, and the agriculture, forestry and fishing industry decreased by 24,2%, and contributed -0,7 of a percentage point to GDP growth. The South African rand strengthened against major currencies during the first quarter of 2018. The strong currency is negative for exports, as our products become less competitive in the world market.

Maize exports were not as expected, and maize prices were very low, contributing negatively to the GDP growth. Abundant maize stocks from last year and favourable weather conditions weighed on the maize price. Drought effects of the Western Cape led to decreased production in field crops, horticultural crops and viticulture, which contributed to the GDP declines. The lower production led to reduced exports of these crops.

Although livestock prices are high, the herd rebuilding process is underway which means there are fewer or reduced supplies or slaughter in the market. These are some of the factors that contributed to the declines in agricultural GDP.

Outlook

Maize

• Prices ended slightly lower week on week. Expect prices to trade sideways to lower as harvest pressure and rate of exports increase.

Oilseeds

• Soybean prices traded lower. The lower US prices placed downward pressure on the local sunflower and soybean price.
• The depreciating rand limited the downward pressure somewhat.
• Harvesting is underway and deliveries will likely pick up, sparking some selling interest.

Beef

• Locally, the lower feed price together with the lack of weaner calves to rebuild the national herd in the medium term may result in carcass prices to remain elevated for a long time period to come.

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