Dr Frikkie Maré, academic departmental head of the Department of Agricultural Economics at the University of the Free State (UFS), provides a monthly market overview of the previous month’s agricultural markets. This is the overview for July 2019.
The price of yellow maize retracted towards the middle of July and traded below R2 800/ton for the remainder of the month. The market closed at R2 765/ton.
The rand strengthened and remained strong for most of the month after which it weakened, trading at R14,36 and R18,87 respectively against the dollar and the euro. The consumer price index (CPI) remained stable during July at 4,5% year-on-year, while the producer price index (PPI) decreased to 5,8% year-on-year. The SARB also lowered the repo rate to 25 basis points during July, causing the prime rate to drop by 10%.
Unfortunately economic growth for quarter one of 2019, as prescribed by the GDP, declined to 0% on a year-on-year basis. The economy also shrunk by 3,2% quarter-on-quarter.
Red meat market
The market for A-grade beef carcasses showed further recovery during July, whilst the price of B- and C-grade carcasses showed a reasonably sidewards movement. The price of lamb also moved reasonably sidewards. The last available price for beef in July was R45,05/kg for A2, R39,91/kg for B2 and R37,21/kg for C2. The last available prices for A2, B2 and C2 lamb and sheep carcasses were R69,65/kg, R51,41/kg and R48,91/kg respectively. In the case of weaner animals, the price of both lamb and beef receded. The last available price was R27,18/kg for calves and R37,51/kg for lambs. The price of hides and skins also moved sidewards.
Wool and mohair market
There was no fibre auction during July. During the last auction, clean wool traded at the same level as the previous auction, but at 2,9% lower than last year. The mohair indicator weakened by 2,1% during the last auction of the season, compared to the previous auction. It also traded 2,6% lower than last year.
The PPI of milk and eggs continued to increase in July, while the index of milk products also improved. The CPI of milk, eggs and cheese increased sharply during the same period. – Frikkie Maré, University of the Free State