Frikkie Maré, agricultural economist at the University of the Free State (UFS) gives his monthly market overview of agricultural commodity markets.
The price of yellow maize decreased systematically during February. The decrease can be attributed to a larger than expected yield and the strengthening of the Rand. The price for yellow maize closed at R1 880/ton.
February was a good month for the Rand since it gained strength against the main currencies. The Rand gained strength due to events such as the appointment of Cyril Ramaphosa as president and the cabinet shuffle, which improved foreign trust. However, by the end of February the Rand dropped slightly due to the motion to investigate land expropriation without compensation being accepted in parliament. Therefore, the Rand closed at R11,79 and R14,39 against the Dollar and the Euro respectively.
Both consumer price inflation (CPI) and producer price inflation(PPI) increased at a slower rate in January with 4.4% and 5.1% respectively. Economic growth for the third quarter of 2017, as suggested by GDP, increased only by 0.8% on a year-on-year basis. The agricultural industry once again contributed positively to this growth, as it did in the second quarter of 2017.
Red meat market
The price of C and B grade beef declined during February while the price of A grade picked up after a sharp decrease in January. The last available prices for February were R46,71/kg for A2, R43.26/kg for B2 and R42.23/kg for C2. Mutton showed the exact opposite price scenario with A grade meat declining and B and C grades increasing. The last prices for A2, B2 and C2 sheep carcasses were R72.73/kg, R61.38/kg and R57.14/kg. Weaner prices traded sideways at first for both lamb and calf meat only to decline at the end of the month to close at R37.62/kg and R40.56/kg respectively. The price for Dorper and Merino skins as well as cattle hides showed a downward trend.
Wool and mohair markets
The indicator price for clean wool was volatile during February and declined by 0,6% at the last auction for the month when compared to the previous auction. However, this is 13.6% higher than the same time last year. The indicator price for mohair increased sharply during the first auction of the year in February, trading 5,3% higher than the previous year and 24.4% higher than the same time last year.
The producer price index of milk and eggs traded sideways during January while the price index for dairy declined. The consumer price index of milk, eggs and cheese increased further during the same time period.