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  • The total poultry imports from Brazil are estimated at R3,2 billion for 2017. During the first 10 months of 2018 Brazilian imports already exceeded R2,9 billion.

    The expected imports for 2018 can be estimated at R3,6 billion. From the world, South Africa imported until October an estimated R5,14 billion broiler meat products. The total imports from the world for 2018 are estimated at R6,2 billion. Keep in mind that the average exchange rate for the Rand to the $ were R13.32 in 2017 and R13.16 in 2018. The import value of poultry products increased by 20% year on year. The profitability of local poultry production is challenged by the increased competitive imports from the world. South African exports of poultry declined year on year by 16,3%. The impact of imports on the poultry industry and the consequent substitution of local production impacts also on other industries such as the grain and oilseeds industry. Growth in the domestic market for locally produced feedstock such as maize and soybean are impacted negatively as well.

    Highlights

    South African poultry imports increased by 20% year on year. The value of poultry imports is estimated at R6,2 billion for 2018. The Poultry Association applied for an adjustment in the import tariff to protect the local industry from cheaper imports.

    Livestock

    The combination of the unusual increase in supply by primary producers of cattle to meet cash flow needs and the seasonal increase of supply by feedlots at abattoirs to meet demand during the festive season weigh on local beef prices.

    The tightening supply in Australia and a strong export demand will support mutton prices in 2019

    At current prices US pork producers will be producing pork at break-even levels during Q1 in 2019. Producers will incur losses with further declines in pork prices.

    ABSA AGRI TRENDS- Wessel Lemmer. 

  • A number of factors played together to create the perfect storm leading to the sharp decline in livestock prices during the past week. Consumers are under pressure due to our weak economic growth and relatively high energy prices and cannot pay more for protein.

  • As a result of maize prices increasing to import parity price levels and carcass prices declining due to the suspension of beef exports as a result of SA’s loss of its free Foot-and-mouth disease status, feedlots are near break-even cost levels.

  • The suspension of beef exports and the poor outlook of summer crops which will subsequently affect the feed industry were the main drivers of the decline in prices in the beef industry.

  • The late rainfall during the planting window of maize threatens to limit the output of the crop in the 2019/20 marketing year.

  • Underneath is an interpreted summary of the aspects covered in the SONA on agriculture. (Full SONA attached in MSWord). It will be interesting to see how the national budget on the 20th February will allocate funds in support of the vision set out in the SONA. The importance of agriculture was highlighted a couple of times.

  • The recent recovery in weaner calf prices fuelled by tax purposes was short lived and did not carry though the past week. The dry conditions and lack of sufficient follow up rainfall in the grain production regions lead to price increases for yellow maize and soybeans.

  • The profitability of pork production will be under pressure from April to June due to increased animal feed prices.

  • Increased demand and optimism surrounding the beef industry is driving beef futures prices higher. China is one of the largest beef importers in the world, however the US only has approximately 1% of that market.

  • Weekly Updated Agri Trends of ABSA -Local prices this week were down on average for all commodities.

  • African Swine Fever spreads through China.

  • Local prices for grains, oilseeds and fiber continued their decline this week. Yellow maize prices decline by 2.7%, while white maize prices declined by 4.9% week-on-week. Week-on-week wheat prices were down 0.4%, soybean prices are down 0.5% and sunflower prices are down 3.6%. A large late winter storm hit the US creating wet conditions along the corn belt which is likely to affect international production estimates. A conclusion to the US/China trade negotiations has been delayed until June. There was no South African wool auction this week, however local wool producers may be facing serious cash flow issues as wool exports continues to be suspended.

    US corn prices declined this week by 2.9%, this is 14.4% lower than prices were a year ago. A big late winter storm has created very wet conditions along the corn belt which may resulting in flooding and disrupt planting. The US market is currently watching the weather closely as reduced acreage will disrupt the supply/demand outlook. US traders are currently net short for approximately 246 thousand corn contracts which could support South African prices.

    The domestic maize market traded lower this week with white maize spot prices dropping by 4.9% week-on-week and yellow maize spot prices dropping by 2.7% week-on-week. The international Grains Council has estimated that there will be a 14% decline in South African maize production in the 2018/19 season due to lower plantings and lower yields. Due to late plantings local producers are concerned regarding the risk of frost occuring up to the first weekend of May. Another concern for the market is the movement of the Rand as the May elections approaches.

    Prices of both white and yellow maize are expected to continue their decline until the end of June; then prices are expected to start increasing. The USDA Production Estimate will be released on the 10th of May which will indicate the extent to which the storm affected the US corn crop. The US/China trade negotiations are ongoing and a conclusion is expected to be delayed until June.

    The international wheat market traded lower overall this week with Soft Red Gulf down by 2.1% and Hard Red Gulf down by 1.7% week-on-week.
    Wheat export shipments are low. The market is expected to remain relatively stable over the next weeks as news on whether delayed plantings due to the storm this week will have an effect on production estimates.

    The JSE spot price was 0.4% lower this week. The new import tariff has not be implemented yet so the tariff currently remains at R490.70. The new wheat tariff of R675.07 is expected to be published this week. New season (Dec 2019) and old season (May 2019) contract prices declined this week. The US import parity is down by 2% week-on-week.

    International wheat prices are expected to move sideways as the market waits for news on delayed spring plantings as well as a conclusion to the trade deal. The USDA is set to release their revised production estimate on the 10th of May. Domestic wheat prices are also expected to remain fairly stable in the next months with a slight increase in prices in May in accordance with seasonal trends.

    US soybean prices increased marginally week-on-week but are down 16.9% since last year. Week-on-week soya oil was up 0.2% while soya meal was down 0.5%. Although the early harvests of the Argentina soybean crop have indicated higher than expected yields, there is some concern over the protein content of the beans. Egypt's growing feed demand has resulted in imports increasing by 5% from last year mainly sourced from the US. The world supply of oilseeds are expected to exceed earlier estimates due to the revised yields of the South American crop.

    The local oilseed market continued to trade downwards this week although prices of soybeans and sunflowers were up from last year. Sunflower
    prices are down 3.6% from last week while soybean prices are down 0.5% from last week. The crushing margin after tax is 57.6% lower than it was a year ago.

    Soybean and sunflower seed prices are expected to follow the seasonal trends and drop in April before increasing from May. Derived soybean prices are expected to start increasing in the months coming up to June.

    Australia: Australian wool prices continued their decline this week, decreasing by 1.5% from last week. The decline in prices is due to the wool offering consisting of an increase of less stylish wools with low yields. There was high competition amongst buyers for the small offering of wools with better styles and higher yields. The next auction has 42,487 bales scheduled for sale.

    Australian wool prices are expected to drop in Rand terms in April and May before increasing in June. Domestic wool is still prohibited from being
    exported and as such prices are under continued pressure. Local wool prices are expected to remain relatively stable from April to June. Domestic cotton prices are expected to decrease slightly in the next three months.
    Local: There was no South African wool auction for the week ending 12th April 2019. The next auction is scheduled for the 17th of April. Wool prices are under pressure and are expected to continue to decline. Disease outbreaks in China as well as the US/China trade negotiations are currently taking priority for Chinese authorities. The FMD outbreaks in South Africa are of growing concern for Chinese government. Local wool producers may be facing cash flow problems due to the delay before the suspension of wool exports is lifted.
    USA: The cotton A Index increased by 0.6% week-on-week; this is 3.4% higher than a month ago however is 2.0% lower than the same time a year ago. Producer offerings and demand was moderate this week. Planting of new season cotton is expected to increase this week after widespread rainfall was welcomed to areas where moderate drought conditions had been experienced.
    Local: South African cotton prices are up by 13.9% from the same time last year however week-on-week prices are down by 0.5%.

  • The short week is resulting in reduced activity on the international market this week. In the US topside, rump and striploin prices all increased week-onweek while chuck and brisket prices declined week-on-week.

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