Wednesday

April 17, 2024

Agribusiness Biweekly Insights Report – Standard Bank

Field Crops

Since the year 2020, South African food price inflation has increased on a yearly basis. Domestic food price inflation averaged 11% in 2023, which was an increase from 9.5% in 2022. Unfavourable weather conditions for local agriculture, including persistent dryness and heatwaves, have consumers concerned about the inflation outlook for 2024. However, according to the Agricultural Business Chamber (Agbiz), the increases in food inflation over the past two years were largely driven by international market factors and to a much lesser extent, domestic market dynamics. As such, we can still expect international market developments to still be the dominant driver of domestic soft commodity prices, and in turn, food price inflation. The United States Department of Agriculture (USDA) is expecting a large volume of global grain and oilseed production for the 2023/24 marketing year (MY). Global maize production is forecast to increase by 6.3% year-on-year (y/y) to a record 1.23 billion tons, wheat is expected to dip marginally by 0.3% y/y to 786.7 million tons, soya bean is estimated to firm by 5% y/y to a record 396.85 million tons, and sunflower seed should increase by 4.8% y/y to 54.91 million tons. The 2023/24 MY’s production of each of these field crops is forecast to be higher than its respective five-year average.

Click here for the report: Field_Crops_Biweekly_Insights-Report.pdf (standardbank.co.za)

Livestock

The International Trade Administration Commission (ITAC), the South African trade regulator, has approved tariff rebates for about 43 000 tons of chicken for the first quarter of 2024. To date, the regulator has reported that it has issued 65 permits (valid until 27 April 2024) to allow chicken importers to claim rebates on their chicken imports. This is also expected to continue in the second quarter of 2024. In 2023, ITAC anticipated that the market would experience a shortage of 172 000 tons of chicken in 2024 following the bird flu (avian influenza) outbreaks that occurred around the country. The bird flu outbreaks significantly diminished the national broiler and layer flocks. However, the South African Poultry Association (SAPA), the mouthpiece of the poultry industry, has since allayed these fears. SAPA has confirmed that there will not be a shortage of chicken on the local market as the poultry industry was able to import 150 million hatching eggs to secure domestic supply. As such, SAPA believes that these rebates are unnecessary, unjustified, and damaging to the local poultry industry since the threat of bird flu has been abated.

Click here for the report: Livestock_Biweekly_Insights-Report.pdf (standardbank.co.za)

Horticulture

Yesterday the South African Citrus Growers’ Association (CGA) announced that the Vietnamese market is now open for South Africa’s 2024 citrus export season. The opening up of the Vietnamese market, thanks to a new bilateral protocol, is quite auspicious. This is because it comes just on the brink of the new citrus season set to begin next month, and South African oranges will now have access to this new market. This new market is estimated to allow for the exportation of an additional 15 000 tons of oranges. In preparation for the fast-approaching citrus season, the Mediterranean Shipping Company (MSC) officially opened its R350 million MEDLOG cold store facility in South Africa, the first such facility that the MSC has built in the world. This cold storage facility is estimated to accommodate 10 000 pallets and it is less than 10km from the Port of Durban. The importance of this new facility cannot be overemphasized. Its purpose is to ensure the ready availability of cold storage capacity for future fruit volume expansions. This investment is in line with the CGA’s commitment to grow citrus exports by 260 million cartons by 2032.

Click here for the report: Horticulture_Biweekly_Insights-Report.pdf (standardbank.co.za)