Grain market dynamics

According to the August 24 WASDE report, the Brazilian maize crop is estimated to decrease by 15 million tons during the 23/24 season. This is likely to weigh on their local stock-to-use ratio, price competitiveness and ability to maintain their position as the leading exporter of maize. As the US re-emerges as the leading exporter, current-season production prospects in the US will be key in giving global maize markets direction. Current US production conditions are extremely favourable, adding further momentum to the downward price trend in global maize prices, apparent since May 2022.

Livestock market dynamics

Livestock prices, especially those of weaner calves and class-C carcasses, have been under pressure since the start of the year.  We attribute this to an influx of live animals from Namibia due to extremely hot and dry conditions during the previous summer rainfall season. This, combined with consumer income pressures has kept price growth muted. We expect an interest-cutting cycle, and other factors such as lower fuel prices could stimulate demand towards the end of the year.

Vegetable market dynamics

The informal market has been widely established as a key demand pool for fruit and vegetables. Here, access to social grants underpins a notable share of this demand. The graph shows that prices for potatoes were under pressure during and after the COVID-19 Social Relief of Distress grant was suspended for two months (April and May) in 2022. This grant has been extended to March 2025. The nature and quantum with which it will be implemented beyond that will likely have an effect on local vegetable market dynamics.

High-value export industry market dynamics

Given the reliance on Europe and the risk that it poses, increased attention has been given to diversification into other markets. During the early 2000s, this was focused on China with its large population and rapid economic growth. Recently, structural issues in the Chinese economy and an ageing population, combined with rapid economic growth in markets such as South East Asia, have shifted market access initiatives to other markets such as India.

Considering the “S” in ESG – agriculture and inclusive finance

The case for financial inclusion in South Africa’s agriculture sector is compelling, particularly given that around 16 million hectares of land have been transferred through land reform programmes, and a further 16 million hectares is communal land with untapped agricultural potential. This indicates that substantial agricultural resources exist within the developing sector, and growth in agriculture will largely depend on increasing the productivity of these resources.