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.
The cost of yellow maize increased sharply during May due to the higher international maize price which was further supported by the weakening rand. The market closed at R2 889/ton.
The rand weakened against the main currencies during May and traded at R14,55 and R16,27 respectively against the dollar and the euro at month-end. During May, the consumer price index (CPI) dropped to 4,4% year-on-year, while the producer price index (PPI) rose to 6,5% on a year-on-year basis. Unfortunately the 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 May. However, the price of B- and C-grade carcasses declined. An increase in A- and C-grade sheep carcasses was noted, whereas B-grade carcasses showed a decrease. The last available price for beef in May was R44,72/kg for A2, R38,64/kg for B2 and R37,42/kg for C2. The last available price for A2, B2 and C2 lamb and sheep carcasses were R66,03/kg, R47,74/kg and R46,34/kg, respectively. In the case of weaner animals, the price of lamb rose substantially whilst the price of beef showed a further decline. The last available price was R27,40/kg for calves and R35,97/kg for lambs. The price for skins and hides also showed further sideward movement, which could indicate that the market is finally stabilising.
Wool and mohair market
The wool market remained under pressure during May as the discontinuation of exports to China prevailed. During the last auction in May, clean wool traded 1,8% lower, compared to the previous auction, but was still 0,6% lower than last year. The indicator price of mohair also increased by 0,7% during the May auction, compared to the previous auction, and traded 3,4% higher than last year.
The PPI of milk and eggs continued to increase in May, while the index of milk products subsided. The CPI of milk, eggs and cheese increased during the same period.