Verbruikers sal na verwagting toenemend armer word aangesien Suid-Afrika se ekonomie steeds teen ‘n lae tempo groei, terwyl  erbruikersprysinflasie verhoog . 

The household expenditure for consumers increased and this support the market for domestic agricultural products. Equally important for primary producers is the fact that the secondary industrial sector’s growth increased by 4,5% in the third quarter.

In the past 5 years, volatile weather conditions have kept the South African producers on their “knees”. Through these trying times they’ve always remained resilient. Another dry and trying season.

Maize: The international corn market traded negatively week-on-week with US yellow corn trading 2.4% lower. The premium for Kansas white
corn is 19.3% down week-on-week. Domestic maize prices traded negatively this week with yellow maize down 2.3% and white maize down
1.3%. In their third production forecast the Crop Estimates Committee estimates that the total maize crop will be 10,655 million tons; this is
0.9% more than estimated in their second forecast.
Wheat: The US wheat prices are at contract lows this week with soft red down 2.8% and hard red down 3.1% week-on-week. The US Spring
plantings are currently 5% completed; the norm for this time of year is approximately 21%. Local wheat prices traded marginally positive with a
0.4% week-on-week increase. Accourding to the Crop Estimates Committee, farmers intend to plant 513 450ha of wheat for the 2019 season
which is 2% more than the 2018 crop.
Soybeans: The US soya market traded negatively week-on-week with prices of soybeans down 1.9%, soya oil down 2.6% and soya meal
down 1.2%. Domestic soybean prices traded 0.3% down week-on-week. The crushing margin after tax is 17.8% higher week-on-week
however, is 60.8% lower than the crushing margin of R1186.15/ton received last year.
Fibre: Wool seasonal trends indicate a slight increase in prices June before declining again in July; while Australian prices are expected to
follow this trend, an increase in South African wool prices would be unlikely considering the pressure currently on the market. Current cotton
prices are 10% higher than prices experienced a year ago.

The international corn market traded negatively week-on-week with US yellow corn trading 2.4% lower. The premium for Kansas white corn is 19.3% down week-on-week however has increased by 179% from last year's premium of US$1.77/ton. Hope regarding the US/China trade deal is turning into disappointment as there is no conclusion in sight. The Brazil crop is large and the Safrinha corn has been rated as 89% good quality with 11% average. Due to the wet ground conditions delaying plantings there is concern that US farmers may switch from corn to soya.

Domestic maize prices traded negatively this week with yellow maize down 2.3% and white maize down 1.3%. However, prices for both yellow and white maize are higher than prices a year ago with yellow maize 25.4% higher and white maize 16.9% higher. In their third production forecast the Crop Estimates Committee estimates that the total maize crop will be 10,655 million tons; this is 0.9% more than estimated in their second forecast. Of the total crop, it is estimated that 49.61% will be white maize while 50.39% will be yellow maize. The expected average yield of maize if 4.63t/ha.

Domestic prices of both yellow and white maize are expected to continue their decline in the next month (May) and then begin to increase from June. However, white maize prices are expected to continue declining at a faster rate than the yellow maize prices. The local market can't expect support from international prices in the coming month as US prices are expected to remain under pressure.

The US wheat prices are at contract lows this week with soft red down 2.8% and hard red down 3.1% week-on-week. The US Spring plantings are currently 5% completed; the norm for this time of year is approximately 21%, the wet weather conditions have delayed plantings. The market was hoping that the low prices would bring in new buyers however this has not been the case. There is a large Russian wheat crop coming in which is expected to further impact US wheat prices negatively.

Local wheat prices traded marginally positive with a 0.4% week-on-week increase. Accourding to the Crop Estimates Committee, farmers intend to plant 513 450ha of wheat for the 2019 season which is 2% more than the 2018 crop. Week-on-week old season wheat (May19) traded up 1.1% while new season wheat (Dec19) traded 0.4% up. The new wheat tariff is still yet to be published, the new tariff of R675.07/ton triggered over a month ago on the 12th of March.

The outlook for US wheat is relatively bleak with prices expected to reach near term lows, global wheat stocks are large with China's wheat stocks at a record high. Domestic wheat prices are expected to continue their slow but steady increase in the next three months. The new wheat tariff of R675.07/ton is expected to be published in May.

The US soya market traded negatively week-on-week with prices of soybeans down 1.9%, soya oil down 2.6% and soya meal down 1.2%. US prices are at a new low since September 2018 this is due to a lack of exports, no conclusion to the US/China trade deal in sight and a large South American crop. The Brazil harvest is 92% complete while the Argentine harvest is 34% complete. The world production of soybeans has been revised with an increase of 4.4 million tons. Chinese imports and crushing of soybeans will be lower than expected due to declining demand for feed in the swine industry following the African Swine Fever outbreak reducing their pig herd.

Domestic soybean prices traded 0.3% down week-on-week while the sunflower seed prices traded up by 0.4%. Prices of both soybeans and
sunflowers are higher compared to this time a year ago. The crushing margin after tax is 17.8% higher week-on-week however, is 60.8% lower than the crushing margin of R1186.15/ton received last year. The third production forecast released by the Crop Estimate Committee showed that the expected production of soybeans will be 1.3 million tons (1.55% more than the estimate from the second production forecast), the expected yield is 1.77t/ha.

The international soya market is currently at a new low since September 2018, it is expected that prices will continue their decline as the large South American crop puts pressure on the US market as they await news on the US/China trade negotiations. Domestic soybean prices are expected to continue their slow decline until June when they will start to increase again. Domestic sunflower seed prices are expected to follow a similar outlook.

Australia: There was no Australian wool auction for the week ended 26 April 2019. The next auction will be held in the week beginning 29th April 2019. South African wool prices are expected to continue their downward spiral with shorter cuts experiencing the largest impact on prices. Although there are talks to reopen the South African wool export market this is unlikely to happen in the short term. Seasonal trends indicate a slight increase in prices June before declining again in July; while Australian prices are expected to follow this trend, an increase in South African wool prices would be unlikely considering the pressure currently on the market. A slight bump in prices of long good quality wool may occur but shorter wools will continue to experience declining prices.
Local: There was no South African auction this week. The next auction is scheduled for the 9th of May 2019.
USA: The US cotton market traded negatively this week; the Cotton A Index was 2% lower week-on-week and is 4.6% lower than last year. Wet
weather and low temperatures across parts of the US slowed fieldwork and planting activity. Spot trading was inactive with moderate demand and an offering of 8,277 bales which is almost 70% less than the 27,298 bales offered last week.
Local: Domestic cotton prices experienced a marginal increase of 0.6% week-on-week. Current prices are 10% higher than prices experienced a year ago. Farmers in the Indore region of India are intending to increase their cotton planting by 15% following increased demand; this may support local prices in the coming months. Domestic prices are expected to remain fairly stable in the coming months.

The domestic beef and mutton market remained fairly stable this week with marginal price movements while the poultry market moved downwards and the pork market sideways.

Beef market trends

International beef market

Prices in the US beef market trended downwards this week, the largest week-on-week movement in price was striploin which declined by 8.7%. Compared to a year ago prices are much lower with prices of rump, striploin and topside between 15% and 18% down. The USDA cold storage report indicates that the frozen beef stocks are 5% down from last month and 9% down from last year. The wet weather in the US has resulted in spikes in the grain prices resulting in increased production costs of beef as feed costs increase which has added pressure to the beef prices. President Trump has announced the launch of a support system amounting to $16 billion to assist US farmers affected by the US/China trade war. The New Zealand beef market is experiencing increased demand from China with beef exports to China increasing by 3 600 tons compared to a year ago. It is expected that there will be extreme protein shortages due to the African Swine Fever outbreak, this has resulted in increased speculative buying of New Zealand beef.

Local beef market

The domestic beef market remained fairly stable this week with marginal price movements. The price of class A and class C beef increased slightly week-on-week while the weaner price declined by 0.6%. The weaner price is almost 21% lower than prices a year ago. The import parity has declined by 4.9% compared to last week.

Outlook

The US market is hoping for a slight bump in demand due to grilling season which will provide support to prices. The announcement of the trade assistance package by Donald Trump has indicated that there is no end in sight for the US/China trade war. Domestic beef prices are expected to remain fairly stable for May. From June the class C price is expected to increase while the class A price is expected to decline, weaner calf prices are expected to remain stable for the next three months.

Sheep meat market trends

International sheep meat market

Prices for New Zealand lamb and ewes increased week-on-week by 1.4% and 1% respectively. The New Zealand market has experienced high demand for lamb exports with their export values for this season to 11 000 tons ahead of last season, despite concerns at the start of the season. New Zealand lamb exports to China constitute 41% of this season's exports. Export demand from the EU is lagging behind last season's levels, however increased demand has been seen coming from Germany and the Netherlands. The import parity for lamb increased by 0.2% while the import parity for ewes declined by 0.2% week-on-week. The price for mutton ribs has increased by 2.2% week-on-week but is down by 5.6% year-on-year.

Local sheep meat market

In the local market this week the price for class A remained relatively stable with only a 0.2% increase in price while the class C price experienced a nice increase of 3% week-on-week. The price of feeder lambs declined by 0.3% this week, the current price is 17.1% lower than prices a year ago. The number of animals slaughtered this week is 27.4% more than last week. The price of dorper skins has increased by 7.9% week-on-week, prices are almost 17% higher than a year ago.

Outlook

Demand for New Zealand lamb is expected to remain strong which will lend support to international prices. The domestic price for class C is expected to follow an upward trend from May onward due to increased seasonal demand. Domestic prices for Class A and feeder lambs are expected to remain fairly stable for the rest of May going into June, in June the prices are expected to experience an increase before stabilising at that increased level in July.

Pork market trends

International pork market

The African Swine Fever Outbreak in China continues to be an issue internationally and seems to be providing support for international prices. Week-on-week the price of pork carcass, loin and ham each increased by approximately 2% while the US rib price declined by 3.9%. There is concern in the US market as China's preferred supplier for hog replenishment is the EU. Traders in the US are becoming concerned that the US will not regain all of the Chinese market share that they have lost during these US/China trade negotiations. The import parity for ham remained fairly stable this week while the import parity for ribs declined by 4.4% week-on-week. The USDA Cold Storage report indicates that the stock of frozen pork is 2% higher than last month's stock but is down by 2% compared to a year ago. Trump has announced the launch of a trade assistance package for US farmers affected by the US/China trade war, $100 million is dedicated for the establishment of new export markets through the Agricultural trade Promotion Programme (ATP).

Local pork market

The domestic pork market moved sideways this week with prices remaining stable as only marginal increases in prices were experienced. Year-on-year the price of porkers has increased by 3.7% while the price was baconers has increased by 10%. Compared to last week 5.9% more pigs were slaughtered this week, this is 25.8% more than the number of pigs slaughtered a year ago. The AMIE price for loins has increased by 26.1% compared to a year ago.

Outlook

The international pork market is expecting continued high levels of volatility in the short term. The US market still lacks certainty on which way the market will move with continued pressure from the US/China trade war as well as concerns regarding African Swine Fever. Prices in the domestic market is expected to remain fairly stable for the next three months. Domestic prices may experience a slight dip in June before picking up again in July to follow an increasing seasonal trend.

Poultry market trends

International poultry market

The US poultry market traded positively this week. The price of whole birds remained stable with a slight increase in price while the price of chicken breasts increased by 3.2% week-on-week. Fresh and frozen MDM prices increased by 3.8% and 1.2% respectively week on week. The price of US leg quarters declined slightly this week while the price of EU leg quarters increased. Compared to a year ago the price of US whole birds is 13.6% lower. The international poultry prices are expected to continue receiving support due to the African Swine Fever outbreak in China. The USDA cold storage report indicates that frozen chicken stocks are up 3% from last month. The $16 billion trade assistance package announced by Trump includes $14.5 billion for direct payments to producers through the Market Facilitation Programme (MFP) and $1.4 billion for commodity purchases through the Food Purchase and Distribution Programme (FPDP).

Local poultry market

Domestic poultry prices moved downwards this week. Compared to last week the price of frozen whole birds declined by 1.5%, fresh whole birds declined by 1% and Individually Quick Frozen prices declined by 1.3%. Increasing grain prices are expected to put the domestic poultry prices under pressure.

Outlook

International poultry prices are expected to experience continued support as demand increases due to the protein shortage following the African swine fever outbreak. Domestic poultry prices are expected to continue their decline for the rest of the month. In line with seasonal trends prices of whole frozen birds are expected to increase from June onwards while prices of whole fresh and IQF are only expected to increase from July.

Hide market trends

Local hide market

The domestic hide price for the week ending 24th May 2019 remained fairly stable at R1.72/kg on average, this is 0.15% lower than the average price last week. Current prices are 77.9% lower than prices a year ago. The RMAA price for feedlot hides declined by 2.4% while the RMAA price for field hides increased by 2.5% week-on-week.

Outlook

With domestic hide prices almost 80% lower than prices a year ago the domestic hide market continues to be under pressure. The global market for hides is struggling with the needed relief not expected in the short term.

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. 

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.

US Kansas yellow corn prices increased by 0.7% week on week. The USDA in its latest world supply and demand estimate report raised its forecast of global corn ending stocks for 2019/20 to 301 million tons, up from 296 million tons last month. This month’s 2019/20 US corn outlook is for lower US production and reduced use.

The price of Hard Red Winter wheat decreased by 1.0% and the price of Soft Red Winter wheat increased by 0.7% week on week. Current prices for HRW wheat is 10.7% lower compared to prices a year ago. The US wheat prices were capped by plentiful global supplies. According to the November USDA report global supplies are higher with increased production forecasts for the EU, Russia, and the Ukraine.

Maize: The good rains received over the past week ensure enough moisture in some parts of the country to begin planting. Producers in
Mpumalanga have progressed very well with their planting and have planted almost 100% of their intended area even though their planting period started later than normal. The eastern summer crop regions and Gauteng have planted about 50-60% .The western Free State and the North West have only planted approximately 15%, however we expect the pace to pick up after the rains received this past two weeks. Some parts of the following districts such as Bultfontein, Hoopstad and Bothaville remain dry. The current planting rate is however looking better than the planting rate seen at the same time last year. At the current pace it seems the intended planting area under maize estimated by the CEC might materialize.
Wheat: Prices in the domestic wheat market traded negatively this week. The wheat spot price decreased by 0.4% week on week. Most of the
producers in the Western Cape have finished harvesting. In the Swartland area yields were approximately 25% lower than the previous season. It is expected that the final wheat crop in the Western Cape may be around 640,000 tons. The grades of the local wheat is good despite the dry
conditions (especially in the Western Cape).
Oilseeds: Crushing margins remain negative at R613.73/ton. Year on year crushing margins are lower by 190.7%. Crushers remain under
pressure. The soybean spot price increased by 0.4% and the sunflower seed spot price increased by 1.2% week on week. Mpumalanga
producers have planted approximately 90% of their soybean hectares. The soybean planting intentions in Mpumalanga will be met in the optimal
planting period. Rains were received in most parts of the summer crop growing areas. The North West and western Free State producers have
planted 15% of the intended area. With soil moisture levels better than a few weeks ago, we anticipate planting to gain momentum in the region.
Fibre: Local cotton prices are expected to decline in the next two months because the Northern Hemisphere will be supplying the market in the
next months which could add pressure to the cotton prices, especially if the uptake in China and Europe is lower than previous levels. The South
African Wool market remained unchanged at a value of R169.17/kg (clean) compared to the previous week. There was no auctions held last
week. Generally good quality fine and medium length merino wools continued to attract good competition on the auction floors throughout
November. 

The spot price of white maize decreased by 4.3% and the yellow maize spot price decreased by 1.2% week on week. The good rains received over the past week ensure enough moisture in some parts of the country to begin planting. Producers in Mpumalanga have progressed very well with their planting and have planted almost 100% of their intended area even though their planting period started later than normal. The eastern summer crop regions and Gauteng have planted about 50-60% .The western Free State and the North West have only planted approximately 15%, however we expect the pace to pick up after the rains received this past two weeks. Some parts of the following districts such as Bultfontein, Hoopstad and Bothaville remain dry. The current planting rate is however looking better than the planting rate seen at the same time last year. At the current pace it seems the intended planting area under maize estimated by the CEC might materialize.

US corn prices were higher on improved trade outlook as Canada, Mexico and the United States approved changes to a preliminary trade deal struck last year to replace their existing pact. Locally, there's been improvement in the rainfall in the past two weeks of December for most of the summer rainfall area. Longer term rain forecast for the summer rainfall area, Namibia and Botswana indicate higher rainfall prospects towards the second part of summer.

Prices in the domestic wheat market traded negatively this week. The wheat spot price decreased by 0.4% week on week. Most of the producers in the Western Cape have finished harvesting. In the Swartland area yields were approximately 25% lower than the previous season. It is expected that the final wheat crop in the Western Cape may be around 640,000 tons. The grades of the local wheat is good despite the dry conditions (especially in the Western Cape).

With global supplies rising more than consumption, 2019/20 ending stocks are raised to a record 288.3 million tons. The abundant global supplies will limit any major increases of the wheat price in the next 3 months. Locally, wheat prices are expected to trade sideways from December onwards. South Africa is a net importer of wheat therefore local wheat prices follow international wheat price swings. Due to that, the expected smaller wheat crop will not influence local wheat prices.

The prices of oilseeds in the US traded negatively this week. The price of soybeans in the US gulf decreased by 0.8%, the price of soya oil declined by 0.4% and the price of soya meal decreased by 0.2% week on week. A bearish factor is the ongoing uncertainty regarding the conclusion of phase one of the trade deal between the US and China. The developments in China, contribute to the higher prices of vegetable oils and the lower prices of soybean meal and soybeans. The 2019/20 soybean season will be the first season in 4 years in which world production will be lower due to extreme weather conditions in the US. The other region to monitor is South America. The South American soybean season started with dryness followed by delayed planting. Weather conditions have improved but there are still some critical pockets of dryness in Paraguay, Argentina and Brazil.

Crushing margins remain negative at R613.73/ton. Year on year crushing margins are lower by 190.7%. Crushers remain under pressure. The
soybean spot price increased by 0.4% and the sunflower seed spot price increased by 1.2% week on week. Mpumalanga producers have planted approximately 90% of their soybean hectares. The soybean planting intentions in Mpumalanga will be met in the optimal planting period. Rains were received in most parts of the summer crop growing areas. The North West and western Free State producers have planted 15% of the intended area. With soil moisture levels better than a few weeks ago, we anticipate planting to gain momentum in the region.

The US soybean outlook according to the latest USDA WASDE report is for lower production, reduced crushing and higher ending stocks. US
soybean production is forecast lower due to lower yields and an unchanged harvested area. Other oilseed production changes in the major oilseed producing areas include lower sunflowerseed production for Argentina and lower rapeseed production for Australia and the EU. The expected abundant supplies in South America may further add downward pressure on global oilseed prices in the next few weeks. The local oilseed prices are following the international oilseed prices. Prices are expected to decline slightly in December and trade sideways from January 2020.

The Australian Wool Exchange (AWEX) Eastern Market Indicator (EMI) lost 38 cents to 1,492 c/kg (clean) from 1,530c/kg (clean) week on week. A strengthening Australian dollar against the major trading currencies used in wool trading added downward pressure on prices. The issue encountered last week was the timing of large volumes of wool coming into the market in an environment where normal delivery capabilities for overseas buyers and local exporters are hindered. The Chinese New Year is falling on 25 January next year; last week was in effect the last pre-Christmas opportunity to ship in time before the Chinese mills close down for their New Year shutdown as mentioned by AWI.

Local: The South African Wool market remained unchanged at a value of R169.17/kg (clean) compared to the previous week. There was no auctions held last week. Generally good quality fine and medium length merino wools continued to attract good competition on the auction floors throughout November. The next sale is scheduled for 9 January 2020.

USA: The Cotton A index decreased by 1.3% week on week. In the November WASDE report, the USDA estimates the 2019/20 world cotton production lower and world trade higher. World production is lowered by nearly 3.0 million bales and the main reductions were primarily in the US, Pakistan, India, and China. Economic growth is a major influencer for cotton demand. China's cotton consumption has been lowered for the 2018/19 and 2019/20 forecasts due to slower economic growth in China which is exacerbated by the US/China trade war.

The Chinese middle class consumer is the largest influencer of wool demand globally, the uncertainty regarding phase one of the trade deal between the US and China, may continue to add bearish pressure on international wool prices. Australian wool quantities on offer are expected to increase in the next 2 weeks leading up to the three-week Christmas sale recess. Locally good quality fine and medium merino wools continue to attract competition and buyer interest. Due to shipping backlogs currently experienced and the upcoming Chinese New Year holidays (that falls on 25 January 2020), which may result in deliveries not being able to reach clients by the 20th January. The brokers and buyers have agreed to postpone auctions till next year to ensure product reaches destination on time. The next sale is scheduled for 9 January 2020,

Beef: Grazing conditions improved over most parts of the Free State, Mpumalanga, Limpopo and KZN after receiving good rainfall over December and January. Namibia and Botswana also received very good rainfall the past weeks and need to start rebuilding their depleted herds as well. This will also lower the immediate supply of not only breeder cattle into SA, which will be supportive for local beef prices. The FMD outbreak is still not completely under control. The national ban of auctions continues to place producer cash flows under pressure. The demand for weaner calves is low at the feedlots due to the uncertainty the latest FMD outbreak has caused.

Mutton:  According to Santam Agri’s weather report, some sporadic rainfall occurred over some parts of the Northern Cape and Eastern Cape. Drought conditions still persist in the regions, because the very hot day temperatures caused high evaporative demand. Natural grazing and pasture conditions in the large sheep producing areas continues to deteriorate.

Pork: The local pork prices traded lower this week due to subdued demand. This week was a flat week, consumer demand for red meat was low across the board. The average porker price is 1.0% lower at R27.11/kg, while the average baconer price declined by 1.7% to R25.79/kg. The average cutters prices were 1.7% lower at R26.38/kg and the average heavy price was 0.4% lower at R25.14/kg. The sausage price was 0.3% lower at R20.01/kg. Feed prices are the largest cost component in piggeries. The improved rainfall during the planting of maize and soybean crop increased the business confidence amongst our maize and soybean producers. We expect that the hectares planted will improve (compared to estimates a month ago), supporting lower production costs.

Poultry: Local poultry prices and uptake was flat this week. Prices are expected to find support because poultry remains a cheaper protein source compared to beef and mutton. Seasonally January is a period of lower poultry prices, with poultry prices following the downward trend in beef and mutton prices. Prices are expected to pick up towards March.

Hides: The current average hide price is R1.42/skin. The current price is 2.9% higher than prices were a month ago and the current hide price is 64.1% lower than prices were a year ago. The local market remains under pressure. Global slaughter continues at a good rate, with global hide stocks also rising. Locally week on week prices were supported by the re-opening of the automotive plants and lower slaughter numbers.

Prices in the international beef market traded mostly negative this week. The price of topside, rump and brisket decreased by 2.9%, 4.7% and 0.4% respectively week on week. The price of striploin remained unchanged and the price of chuck increased by 4.7% week on week. Tight livestock inventories in Australia will drive beef production down. Strong global demand will continue to support cattle prices in 2020.

Week on week, beef prices were mixed in the different classes. The average Class A price remained unchanged at R45.01/kg and Class C prices moved 0.5% higher to R39.30/kg week on week. Grazing conditions improved over most parts of the Free State, Mpumalanga, Limpopo and KZN after receiving good rainfall over December and January. Namibia and Botswana also received very good rainfall the past weeks and need to start rebuilding their depleted herds as well. This will also lower the immediate supply of not only breeder cattle into SA, which will be supportive for local beef prices. The FMD outbreak is still not completely under control. The national ban of auctions continues to place producer cash flows under pressure. The demand for weaner calves is low at the feedlots due to the uncertainty the latest FMD outbreak has caused.

Strong demand will be the main factor in the global beef market in 2020, while beef production is expected to experience slow growth. Locally, the closure of all auctions in South Africa amid the latest FMD outbreak continues to cause uncertainty and puts producers under strain. Local beef prices is expected to follow a downward trend after the December period based on seasonal trends.

Sheep meat market trends

International sheep meat market

Outlook

This week, lamb and mutton prices traded negatively when compared to the previous week. The national average Class A carcass lamb prices decreased by 6.0% to R72.41/kg and the average Class C carcass prices decreased by 1.8% to R52.52/kg. The price of merino skins was down by 2.1% from R46.67/skin  to R45.71/skin this week. The Dorper skin price was down by 18.0% week on week at R28.69/skin. Compared to a year ago the price of dorper skins is 11.1% higher and the price of merino skins is 26.29% lower. According to Santam Agri’s weather report, some sporadic rainfall occurred over some parts of the Northern Cape and Eastern Cape. Drought conditions still persist in the regions, because the very hot day temperatures caused high evaporative demand. Natural grazing and pasture conditions in the large sheep producing areas continues to deteriorate.

The international price of lambs and ewes decreased by 6.8% and  6.2% respectively week on week. The price of mutton ribs increased by 5.0% week on week while the price of mutton shoulders remained unchanged week on week. Hot and very dry conditions continues to put pressure on grazing conditions in Australia. This combined with the Christmas shutdown added pressure on sheep slaughter prices. The market expects more declines in the coming weeks. There is currently a large decrease in Chinese lamb buying.

Looking forward, the reduced sheep flock and strong demand from China is likely to keep lamb prices supported in 2020. Locally, lamb and mutton prices remain subdued due to the availability of cheaper protein alternatives. Local mutton/lamb prices are expected to decline  which is normal in January following a high-demand and consuming festive season.

Local pork market

Outlook

The international pork market traded mixed this week with the US pork carcass price and loin price lower by 1.3% and 2.5% respectively. The US rib prices and US ham price higher by 0.9% and 2.5% respectively week on week. The import parity for pork ribs increased by 1.9% and  the import parity of ham increased by 3.0% week on week. In the EU, pork production are set to rise in 2020, driven by export opportunities. In China, ASF still dominates the outlook, Rabobank expects a decline in pork production in 2020. Pork production in North America is expected to rise above all other meat types.

The local pork prices traded lower this week due to subdued demand. This week was a flat week, consumer demand for red meat was low across the board. The average porker price is 1.0% lower at R27.11/kg, while the average baconer price declined by 1.7% to R25.79/kg. The average cutters prices were 1.7% lower at R26.38/kg and the average heavy price was 0.4% lower at R25.14/kg. The sausage price was 0.3% lower at R20.01/kg. Feed prices are the largest cost component in piggeries. The improved rainfall during the planting of maize and soybean crop increased the business confidence amongst our maize and soybean producers. We expect that the hectares planted will improve ( compared to estimates a month ago), supporting lower production costs.

Outlook

The international pork market traded mixed this week with the US pork carcass price and loin price lower by 1.3% and 2.5% respectively. The US rib prices and US ham price higher by 0.9% and 2.5% respectively week on week. The import parity for pork ribs increased by 1.9% and  the import parity of ham increased by 3.0% week on week. In the EU, pork production are set to rise in 2020, driven by export opportunities. In China, ASF still dominates the outlook, Rabobank expects a decline in pork production in 2020. Pork production in North America is expected to rise above all other meat types.

The local pork prices traded lower this week due to subdued demand. This week was a flat week, consumer demand for red meat was low across the board. The average porker price is 1.0% lower at R27.11/kg, while the average baconer price declined by 1.7% to R25.79/kg. The average cutters prices were 1.7% lower at R26.38/kg and the average heavy price was 0.4% lower at R25.14/kg. The sausage price was 0.3% lower at R20.01/kg. Feed prices are the largest cost component in piggeries. The improved rainfall during the planting of maize and soybean crop increased the business confidence amongst our maize and soybean producers. We expect that the hectares planted will improve ( compared to estimates a month ago), supporting lower production costs.

The USDA in its Quarterly Hog's and Pigs report estimates the Sep-Nov 2019 pig herd higher than the same period in 2018, which will be supportive of a higher slaughter and production rate in the first half of 2020. Given the high prices in China in 2019 it is expected that the EU, Brazil and Canada will increase pork shipments to China in 2020. Locally, prices are expected to follow a sideways to downward trend from January. It is normal behaviour for consumers to focus on other financial obligations such as school after a season (festive holidays) of high meat demand and consumption.

Outlook

The international poultry price traded mostly higher this week. The price of US whole birds increased by 1.1% week on week. The price of fresh MDM increased by 2.3% and the price of frozen MDM increased by 1.0% week on week. Compared to a year ago the price of US whole birds and US chicken breasts are lower by 11.9%  and 15.2% respectively. The price of US leg quarters increased by 0.7% and the price of EU leg quarters increased by 3.7% week on week. Compared to a year ago the price of US leg quarters are 8.7% higher and the price of EU leg quarters are 24% higher. The trade issues between the EU and Brazil is still an on-going concern, and is likely to carry-on for the 1st half of 2022. Global breast meat prices is expected to remain under pressure in 2020, because Europe is the only western market that’s open to breast meat imports and changes are needed in Brazil’s animal health monitoring systems.

The average poultry prices were negative this past week. The average price for frozen birds declined by 4.0% to R25.78/kg, the average prices for fresh whole birds also declined by 4.0% to R27.227/kg and IQF poultry prices were down by 4.1%  to R23.00kg week on week. Poultry industry players do not anticipate any increases in the next few weeks. Feed prices are the largest cost component in the intensive livestock production such as broiler units. The improved rainfall during the planting of maize and soybean crop increased the business confidence amongst our maize and soybean producers.  We expect that the hectares planted will improve.

For January 2020,  broiler prices are forecasted lowered due to higher production estimates adding downward pressure on markets. The USDA's January report forecasts a larger broiler production driven by continued expansion of laying flock in the US. Some "wildcards" could have an effect on markets such as Brexit. Local poultry prices and uptake was flat this week. Prices are expected to find support because poultry remains a cheaper protein source compared to beef and mutton. Seasonally January is a period of lower poultry prices, with poultry prices following the downward trend in beef and mutton prices. Prices are expected to pick up towards March.

Outlook

The current average hide price is R1.42/skin, this is 2.9% higher than last week’s price of R1.38/skin.

The current price is 2.9% higher than prices were a month ago and the current hide price is 64.1% lower than prices were a year ago. The local market remains under pressure. Global slaughter continues at a good rate, with global hide stocks also rising. Locally week on week prices were supported by the re-opening of the automotive plants and lower slaughter numbers.

NB* Hide prices are determined as the average of the RMAA (Red Meat Abattoir Association) prices and prices of independent companies.

Notes on data used

Beef carcass prices: Class A: Weaner or A grade (0-18 months, Milk Teeth).  Class C: (48 – 50 months, 8 Teeth). (Source: Red Meat Abattoir Association; beef carcass prices are a week delayed).  Live weaner calf prices:  Weaner (200-250kg) Average live weaner calf prices (Excluding VAT) at auctions and feedlot in the Northern Free State and auctions in the Central Free State (Bloemfontein) in the current week.  AMIE carcass import parity price; wholesale delivered price of beef trimmings 80VL (Excluding VAT) (Source: Association of Meat Importers & Exporters; prices are a week delayed) Beef trimmings are pieces of meat remaining after steaks, roasts, and other cuts are removed. Beef trimmings are very often used to make ground beef. VL: Visual Lean

Sheep carcass prices: Class A: lamb or A grade (0-12 months, Milk Teeth).  Class C: (28 – 48 months, 8 Teeth). (Source: Red Meat Abattoir Association; sheep carcass prices are a week delayed).  Feeder lamb (27-41kg) Average live feeder lamb prices (Excluding VAT) at auctions and feedlot in the Northern Free State and auctions in the Central Free State (Bloemfontein) in the current week. Dorper Skins:  Price per skin (Source: Red Meat Abattoir Association; Dorper skin prices are a week delayed). Slaughter numbers: The total number of sheep (all grades) slaughtered in the week (Source: Red Meat Abattoir Association; slaughter numbers are a week behind). AMIE carcass import parity price for mutton ribs and shoulders: wholesale delivered price of mutton ribs and shoulders (Excluding VAT) (Source: Association of Meat Importers & Exporters; prices are a week delayed)

Pork carcass prices: Porker: Average price for porker pigs (weighing 20-55.99kg) across the fat thickness levels (PORCUS) Baconer: Average price for baconer pigs (weighing 6579.99kg) across the fat thickness levels (PORCUS). (Source: Red Meat Abattoir Association; pork carcass prices are a week delayed). Fat thickness level (PORCUS): P: <12mm, O: 13-17mm, R: 18-22mm, C: 23-27mm, U: 28-32mm, S: >32mm. Slaughter numbers: The total number of pigs (all grades) slaughtered in the week (Source: Red Meat Abattoir Association; slaughter numbers are a week behind). AMIE loin import parity price: wholesale delivered price of pork loins (Excluding VAT) (Source: Association of Meat Importers & Exporters; prices are a week delayed)

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.

Just as prices for staples such as maize meal start to decline and lower income consumers start to enjoy the benefits of the current old season maize surplus at export price levels the current drought may change the outlook for 2019.

The decrease in the total gross producer value (GPV) of maize for 2019 will be limited by increased maize prices. Due to the severe drought in 2016 the increased price levels maintained the gross producer value of production. It is thus expected to be the case in 2019 as well.

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.

Significant rains were received during the first two weeks of February 2019 covering most of the summer rainfall areas. However follow up rains in the next two weeks is critical to ensure sufficient soil moisture to assist crop development and minimize crop damage until the end of season.

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.

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.