Dr Frikkie Maré, academic 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 May 2020.
The price of yellow maize increased sharply in the first half of May and then decreased again to under R2 500/ton. The market closed at R2 532/ton.
At the end of the month, the rand traded at R17,43 and R19,41 against the dollar and the euro, respectively. Due to the COVID-19 pandemic, Statistics South Africa (Stats SA) is still behind on the release of some of their statistics, which means that April’s consumer price inflation (CPI) and producer price inflation (PPI) data is not yet available.
The prime lending rate decreased to 7,25% during May due to the negative impact of the lockdown on the economy. Economic growth during the last quarter of 2019, as represented by the gross domestic product (GDP), has shrunk to -0,5% on a year-on-year basis. The economy also shrunk by 1,4% on a quarter-on-quarter basis. With two consecutive quarters of economic shrinkage, South Africa has now slumped into a recession.
Red meat market
The market for weaner calves and lambs strengthened during May. When looking at the market movement of beef carcasses, prices ranged from R43,74/kg for A2, R39,74/kg for B2 and R38,47/kg for C2. The last available prices for A2, B2 and C2 lamb and sheep carcasses were R81,88/kg, R57,89/kg and R56,87/kg, respectively.
Prices for both weaner calves and lambs rose to unnatural heights during May. The last available price was R29,85/kg for calves and R40,50/kg for lambs. The price of hides and Merino and Dorper skins moved sideways.
Wool and mohair market
The demand for wool and mohair is currently low due to to the worldwide effect of COVID-19. The indicator price for wool weakened with 3,1% during the last auction in May compared to the previous auction, and traded 4,2% lower than a year ago. The indicator price for mohair decreased with 8,3% during the last auction in May and traded 15,4% lower than a year ago.
Seeing as Stats SA has not yet published their April data, the dairy graphs containing March’s data remains unchanged.
Click here to read the April 2020 market overview. – Dr Frikkie Maré, University of the Free State