Livestock and Fibre Markets. Graph 1b: Beef prices - % changes (y/y) 9.6% 7.5% 6.6% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 14.0% 12.4% 8.0% 6.

Transcription

1 Agri-Weekly Livestock and Fibre Markets 23 September 216 Weekly summary of South Africa s livestock markets: Beef trends Graph 1a: Beef prices - weekly % changes (w/w).5%.3%.3%.3%.% -.5% -1.% -1.5% -1.% 12.% 1.% 8.% 6.% 4.% 2.%.% Graph 1b: Beef prices - % changes (y/y) 9.6% 7.5% 6.6% Class C Class A Contract Class A.4% Weaner calf Graph 1c: Beef prices - % change 3 months ago 14.% 12.4% 12.% 1.% 8.% 6.% 4.5% 4.% 2.%.5%.% -2.% -.3% Table 1: Beef producer prices Beef market - South Africa Date 23-Sep Sep-16 9-Sep-16 3-Year Avg 5-Year Avg Class A (R/kg) % 12.6% Class C (R/kg) % 11.5% Contract: A (*Incl.5thQ, R/kg) % 12.7% Import parity (R/kg) % 24.3% Weaner calves (R/kg LW) % 9.5% LW Live Weight; *Fifth quarter Graph 1d: JSE BEEF CARCASS FUTURES (R/KG Source: JSE, AgriHQ, Own Calculations Dec-16 Graph 1e: Beef price trends (ZA R/kg) 4,38 4,12 3,86 3,6 3,34 3,8 2,82 2,56 2,3 2,4 1,78 1,52 25-Sep Jan-16 3-Jun-16 7-Oct-16 Class A Class C NZ Cow import parity,d/bn **The last two data points are preliminary Contract Weaner calf Domestic: Beef prices rebounded marginally ahead of the month end period. The slowdown in cattle slaughter over the past two weeks added to the firmer tone. Weekly Class A beef prices were a bit firmer at R38.19 per kg, which is 8% higher y/y. Compared to the longer term averages, the current prices are almost 7% and 13% higher than the three-year and five-year averages respectively. Contract Class A beef prices trended sideways at R38.3 per kg, which is up 7% y/y and 7% ahead of the 3-year average.

2 FNB Agri-Weekly: Livestock & Fibre Markets Page 2 Class C beef prices were almost unchanged w/w at R32.73 per kg, up 9.6% y/y. In the cattle market, weaner calf prices eased marginally lower on improved volumes and softer demand. Weekly weaner calf prices were back 1% w/w and almost unchanged y/y at R2.6 per kg live weight. Nonetheless, the current prices are 4.5% higher compared to the same period three months ago. The current beef prices are significantly higher compared to the 3 and 5-year averages as indicated in table 1. In the slaughter market, there has been a slowdown in the number of cattle slaughtered in the past two weeks as producers held on to their stock in anticipation of improved production conditions in the new season. However, some areas remain extremely dry leaving producers with no option but to continue to offload animals in excess of their current capacities. The price trend for the hide market remains sideways despite the recent blowout in the Rand/ US dollar exchange rate. This is a reflection of a slowing demand in the automobile sector and the generally weaker global economy. Graph 1f: Weekly commercial cattle slaughter trends (head) 24, 21, 18, 15, 12, 9, 6, 3, Source: RMMA; Hides: the September 216 figure is preliminary Graph 1g: Average hide prices per kg International beef market update Prices on the US import market were reportedly lower on slow seasonal demand with weak domestic lean market exerting further pressure. The USDA Cattle on Feed report was slightly bearish with placements coming in below expectations at 115%. In its Cold Storage report, USDA indicated that beef storage was up 1.5% m/m and 1.3% y/y at 214,479 tons which is slightly bearish. Boneless beef reportedly bucked the trend of a decline in August/ September and increased. In Australia, cattle prices were a bit firmer on the back of reduced volumes as rains fell in some of the producing areas. The benchmark Eastern Young Cattle Indicator finished the week marginally higher at Au$7.15/kg cwt. Rains are critical for pasture recovery and herd rebuilding phase following a massive culling due to drought and the increased export demand. In New Zealand (NZ), traders have reportedly indicated a weak export market as the combination of a surging NZ dollar and the weaker US market eroded margins JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Graph 1h: US Cattle price trends Cutter 9% lean, US /kg cwt Feeder - CME Index, US /kg lwt Choice Fed, US /kg lwt Graph 1i: Australian cattle price trends (US /kg cwt) Heavy steer Medium cow Trade steer Source: MLA, Graphs 1j to 1k illustrate the extent of beef production across the world. Beef production is expected to recover in 216 while stocks continue to decline.

3 FNB Agri-Weekly: Livestock & Fibre Markets Page 3 61, 6, 59, 58, 57, 56, 55, 54, 53, Graph 1j: World beef and veal production trends ( tons) Figure 1k: World beef import, export & stock trends (' tons) Imports Exports Ending Stocks, RHS 12, 1, 8, 6, 4, 2, Source: USDA, PSD OUTLOOK Most producing areas remain dry and it has become increasingly difficult to hold on to the stock for a bit longer if it does not rain. Nonetheless, conditions are likely to improve in the medium term given the recent forecast for rains in some areas. This will help kick-start the herd rebuilding process which is critical for the sustainability of supplies of live animals in the longer term Weekly summary of the sheep market Graph 2a: Sheep - weekly price % changes (w/w) Graph 2b: Sheep prices - % changes (y/y) Graph 2c: Sheep prices - % change 3 months ago 2.% 1.%.% -1.%.9%.8%.3% 2.% 15.% 1.% 14.6% 11.4% 1.7% 7.9% 25.% 2.% 15.% 1.% 2.7% 11.7% 1.7% 7.4% -2.% -3.% Contract Class A lamb Mutton -2.3% Class A Lamb Feeder Lamb 5.%.% Mutton Contract Class A Lamb Feeder Lamb Class A Lamb 5.%.% Contract Class A Lamb Mutton Class A Lamb Feeder Lamb Table 2: Producer prices Sheep market - South Africa Date 23-Sep Sep-16 9-Sep-16 3-Year Average 5-Year Average Class A (R/kg) % 2.% Class C (R/kg) % 21.5% Contract: A (*Incl.5thQ, R/kg) % 21.1% Import parity (R/kg) % 12.6% Feeder lamb (R/kg LW) % 18.7% LW Live Weight; *Fifth quarter Domestic sheep market update Prices trended a bit firmer towards month end. Weekly Class A lamb prices were almost unchanged w/w at R61.56 per kg, but still 11% higher compared to the same period three months ago and last year. Contract Class A lamb prices advanced marginally w/w to close at R62.32 per kg, which is 21% and 11% higher compared to the same period three months ago and last year respectively. Mutton prices moved marginally higher by.8% w/w at R49.27 per kg, which is up 15% y/y and 12% higher compared to the same period three months ago. The trend in the feeder lamb market was downwards. Weekly feeder lamb prices fell by 2.3% w/w but still 7% higher y/y at R3.6 per kg live weight. Sheep slaughter continued to increase with latest figures for the week ended 23 September up 24% w/w and were 64% higher compared to the same period last year. Sheep slaughter in 216 remains substantially higher compared to the two last years. The cumulative sheep slaughter number is 14% and 73% higher than the 215 and 214 levels respectively.

4 FNB Agri-Weekly: Livestock & Fibre Markets Page 4 6, 5, 4, 3, 2, 1, Graph 2d: Weekly commercial sheep slaughter trends (head) ,4, 1,2, 1,, 8, 6, 4, 2, Graph 2e: Cummulative sheep slaughter trends (head) Source: RMMA International sheep market update: Australian (AU) lamb market continued to benefit from widespread rains across the producing areas as volumes tightened. Lamb prices are almost 2% higher compared to last year. Nonetheless, supplies are expected to rebound in the medium term due to the seasonal availability of young lambs. In New Zealand (NZ), domestic farm gate prices were steady to higher with the 17.5kg lamb slightly up at NZ$93./ head but still down 12% y/y. Mutton prices steadied at NZ$51.2/ head, which is still down by 8% y/y. In the US, the lamb market maintained a sideways trend with the carcass cutout values closing at US$324/ cwt but still down on last year by 1%. The estimated weekly US sheep slaughter was 38, head, down 2.6% w/w and 16% y/y. This brings the year-to-date slaughter number to 1.46 million head, which is still down.4% y/y Graph 2f: Australian lamb prices - ESTLI (Au$/kg cwt) Source: JSE, MLA, AgriHQ, Own Calculations. ***ESTLI Eastern Trades Lamb Indicator Graph 2g: Sheep price trends (ZA R/kg) 7,12 6, 4,88 3,76 2,64 1,52 25-Sep Jan-16 3-Jun-16 7-Oct-16 Lamb Class C Contract lamb NZ Lamb parity ZN Mutton parity ***The last two data points are preliminary OUTLOOK The delay to the onset of the grazing season has resulted in increased sheep slaughter but the medium term outlook has improved. Supplies are expected to tighten as pasture conditions improve should seasonal rains materialise, thus maintaining upward pressure on prices.

5 FNB Agri-Weekly: Livestock & Fibre Markets Page 5 Weekly summary of the pork market Graph 3a: Pork prices - weekly % changes (w/w) Graph 3b: Pork prices - % changes (y/y) Graph 3c: Pork prices - % change 3 months ago 5.%.% -5.% -1.% -15.% 1.5% 1.2% Porkers Baconers Import Par % 14.% 12.% 1.% 8.% 6.% 4.% 2.%.% 11.9% 11.4% 6.8% Porkers Baconers Import Par..% -5.% -1.% -15.% -2.% -1.% -1.9% -18.3% Porkers Baconers Import Par. Table 3: Producer prices Pork market - South Africa Date 23-Sep Sep-16 9-Sep-16 3-Year Average 5-Year Average Porker (R/kg) % 14.3% Baconer (R/kg) % 15.8% Import parity (R/kg) % 17.8% Source: FNB AgriComms; JSE, USDA, Own Calculations Domestic pork market update The pork and baconer market retained the firmer trend on the back of good demand. Weekly porker prices closed at R24.96 per kg, up 1.5% w/w and 12% y/y. Nonetheless, prices have declined by 1% compared to the same period three months ago. In the case of baconers, prices moved marginally higher by 1% w/w at R23.62 per kg. This is 11% higher y/y but still down by 1.9% compared to the same period three months ago. Weekly import parity prices dropped by 12% w/w due to a sharp decline in international prices and a firmer rand. The current import parity prices are however up 7% y/y. Graph 3d: Weekly commercial pork slaughter trends (head) 216 3, 25, 2, 15, 1, Graph 3e: Pork price trends (ZA R/kg) 5, Sep Jan-16 3-Jun-16 7-Oct-16 Porker Baconer Import parity Export parity Source: RMAA, JSE, USDA, Own Calculations **The last two data points are preliminary In the monthly pork import update, the monthly SARS figures showed a further decline in volumes imported during July 216. Pork imports declined by 34% m/m and 62% y/y at 1,23 tons. The yearto-date pork imports reached at 13,242 tons, which is 1% higher y/y. 3, 2, 1, Graph 3f: Pork Import Trends (tons) Year-to-date: July Source: SAPPO, SARS, Own Calculations; *Excludes BNLS countries 7, 6, 5, 4, 3, 2, 1, Graph 3g: Pork Monthly Import Trends (tons) JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC International pork market update

6 FNB Agri-Weekly: Livestock & Fibre Markets Page 6 In the US market, pork prices drifted lower under pressure due to improved supplies. This saw the weekly pork carcass values shedding 2.3% w/w and 5% y/y to US$79.18/ cwt. USDA reported pork inventories for August 216 up 1.4% compared to the average pace of 2% but still down 7% y/y. However, ham stocks increase at a rapid pace which is bearish for the remainder of the year. Stocks of pork bellies were down 37% m/m but still up a whopping 132% y/y. The estimated weekly US pig slaughter was up 5% w/w and 8% y/y at 2.47 million head. The year to date estimated pig slaughter reached million head which is up.8% y/y. Graph 3a: World pork production trends Graph 3b: Worl pork import, export & stock trends (' tons) 2, World beef production (tons, LHS) China-share of world production, RHS 52% 8, 7, Exports Imports Ending Stocks, RHS 8 7 5% 6, 6 1, 48% 46% 44% 42% 5, 4, 3, 2, 1, Source: USDA, OUTLOOK The trend in domestic prices remains sideways to firmer in the short term but there is increased potential for an upswing due to the seasonal increase in demand as the favourable braai weather returns. The spill over strength from the beef market will help prices remain elevated. Weekly summary of the poultry market Graph 4a: Poultry prices - weekly % changes (w/w) 3.6% 4.% 2.1% 2.%.5%.% -2.% -4.% -3.2% IQF Fresh Frozen Import Par. Graph 4b: Poultry prices - % changes (y/y) 15.% 9.% 1.% 5.%.% -5.% -1.9% -1.% -5.7% -15.% -12.6% IQF Frozen Fresh Import Par. Graph 4c: Poultry prices - % change on 3 months ago 1.% 4.6% 5.%.% -5.% -1.% -1.2% -1.3% -15.% -11.3% IQF Fresh Import Par Frozen Table 4: Producer prices Poultry market - South Africa Date 23-Sep Sep-16 9-Sep-16 3-Year Average 5-Year Average Fresh whole birds (R/kg) % 4.1% Medium Frozen whole birds (R/kg) % 3.5% Individually Quick Frozen (IQF) (R/kg) % 9.8% Import parity (R/kg) % -14.5% Source: FNB AgriComms; JSE, USDA, Own Calculations Domestic poultry market update Despite a slight inventory build-up and subdued market conditions, prices managed to lift modestly as we head into the braai months. Weekly medium frozen whole bird prices were firmer on last week at R2.67 per kg, but still down by 2.3% y/y. The current prices have fallen by 1.9% compared to the same period 3 months ago. Fresh whole bird prices increased by 2.1% w/w but still down.5% y/y at R21.74 per kg. At this level, prices have fallen by almost 6% compared to the same period three months ago. In the Individually Quick Frozen whole bird market, prices were up 3.6% w/w and were 4.3% higher y/y at R18.62 per kg. This is 9% higher compared to the corresponding week three months ago.

7 FNB Agri-Weekly: Livestock & Fibre Markets Page 7 Graph 4d: Poultry/maize price ratio Sep Jan-16 2-May Sep-16 Source: Own Calculations, USDA, JSE Graph 4e: Poultry price trends (ZA R/kg) Sep Jan-16 3-Jun-16 7-Oct-16 Frozen whole Fresh whole Imported Leg Quarter (US) IQF #REF! **The last two data points are preliminary 36, 3, 24, 18, 12, 6, Graph 4f: Poultry Import Trends Year-to-date: July Total Poultry Broiler 7, 6, 5, 4, 3, 2, 1, Graph 4g: Poultry Monthly Import Trends (tons) JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Source: SARS, Own Calculations; *Excluding BNLS International poultry market update USDA s Cold Storage report showed a modest drawdown in stocks. As of 31 August 216, total US frozen poultry supplies fell 4% m/m but up 4% from a year ago. Total stocks of chicken were down 6 percent from the previous month and down 1 percent from last year. However, strong export sales have reduced the inventory levels for dark meat which saw the leg quarter stocks falling by almost 9% m/m and 1% y/y. In the case of breast cuts, stocks were reported about 12% higher than last year and almost 3% above the five-year average. The bumper harvests for the global grain crops during 216 bodes well for the livestock sector as feed costs are expected to decline thereby improving profitability. 1, 8, 6, 4, 2, Source: USDA, PSD Graph 4h: World broiler meat production trends ( tons) 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 OUTLOOK The market is set for a slight rebound in the medium term as the braai weather returns and the seasonal outdoor activities increase. Further gains in the red meat market will provide added support for poultry prices. While margins remain under pressure due to high feed costs (see graph 4d), the longer term feed outlook has improved with maize futures for Jul-17 already trending below R3,/t. The expected lower feeding costs in the year ahead should help improve profitability in the sector. Graph 4i: Major broiler meat exporters (' tons) Brazil United States European Union

8 FNB Agri-Weekly: Livestock & Fibre Markets Page 8 Wool and cotton market trends (Graph 5) International: The renewed upward trend in cotton prices continues on concerns over production conditions in some areas of the US. Weekly cotton prices increased by 2.9% w/w and 18% y/y at US78.95 cents/ lb. In India, and Pakistan, the monsoon has reportedly been good and expectations are that production will improve significantly this year. Cotton futures on the InterContinental Exchange (ICE) rebounded and trended upwards with the Dec-16 contract finishing up 4.1% at US7.7 c/lb. The Mar-17 cotton contract was up 4.2% w/w at US7.43 cents/lb. 17,61 16,33 15,5 13,77 12,49 11,21 9,93 Graph 5: Cotton & w ool prices (SA c/kg) Wool 3, 2,8 2,6 2,4 2,2 2, 1,8 1,6 1,4 8,65 1,2 25-Sep Jan-16 3-Jun-16 7-Oct-16 SA Wool Aus Wool Cotton A-Index ICE Futures * last two data points are preliminary Cotton ICE Cotton Futures 23 September 216 Source: InterContinental Exchange (ICE) Dec-16 Mar-17 May-17 Jul-17 Oct-17 Cotton (US c/lb) % Change w/w 4.1% 4.2% 4.1% 3.9% 3.5% Graph 5a: World cotton production trends (' 48-lb bales) Graph 5b: World major cotton importers (' 48-lb bales) 14, 12, 1, 8, 6, 4, 2, 9, 8, 7, 6, 5, 4, 3, 2, 1, 214/ /216 Graph 5c: World cotton imports (' 48-lb bales) Graph 5d: World cotton ending stocks (' 48-lb bales) 6, 5, 4, 12, 1, 8, Ending Stocks, LHS Stock to Use (%), RHS , 6, 6 2, 4, 4 1, 2, 2 Source: USDA, PSD; Wool market: The Australian wool market saw further losses with the AWEX Eastern Market Indicator (EMI) closing the week at AU$12.87 per kg clean wool, which is down 1.8% w/w but still up 4.8% y/y. Sales came in at 37,74 bales which is 87% of the offerings. Fibre market prices 23 September 216 SA prices (R/kg) Australian prices (R/kg) Wool market indicator (R/kg) Australian futures Mar-17 (AU$/kg) Australian futures May-17 (AU$/kg)

9 FNB Agri-Weekly: Livestock & Fibre Markets Page 9 19 long length wool (R/kg) long length wool (R/kg) long length wool (R/kg) Fibre market prices 23 September 216 SA derived Cotton (R/kg) New York A-Index (US$/kg) Cotton Futures Dec-16 (US$/kg) Cotton Futures Mar-17 (US$/kg) Cotton Prices (R/kg) Cotton Futures - InterContinental Exchange (ICE); SA Wool closed for the week Domestic wool market The wool market weakened sharply with the Cape Wools Indicator for the week ended 23 September 216 falling by 5.4% to close at R per kg clean wool. Major buyers were Standard Wool SA with 2,282 bales (27.2%), G Modiano SA with 1,75 bales (2.3%), Lempriere SA with 1,465 bales (17.4%), and Stucken & Co with 1,327 bales (15.8%). FNB Business Agriculture Meet our dedicated team of Agricultural Managers in various regions of South Africa Name Location Cell phone Address** Grewar, Oosthuizen EASTERN CAPE -Port Elizabeth Edmund, De Beer EASTERN CAPE -Port Elizabeth David, Dobrowsky FREE STATE -Bethlehem Martin, Louw FREE STATE -Theunissen Chris, Bekker FREE STATE -Bloemfontein Jan, Theron GAUTENG -Pretoria Greg, Sparrow KwaZulu-Natal -Pietermaritzburg Jurgens, du Preez KwaZulu-Natal -Newcastle Herman, Claassens LIMPOPO -Tzaneen Adolf, Grobler LIMPOPO -Bela-Bela Stephan, Scheepers MPUMALANGA -Nelspruit Theo, Verwey MPUMALANGA -Pretoria Pedrie, Van der Merwe NORTHERN CAPE -Kimberly Frik, Coetzee NORTHERN CAPE -Upington Johan, De Klerk NORTH WEST -BRITS Johan, Strydom NORTH WEST -Potchefstroom Johan, Beukes WESTERN CAPE -Stellenbosch Lize, Morris WESTERN CAPE -George Arno, Cloete WESTERN CAPE -Willowbridge **Please ignore the spaces in the addresses; they were inserted to break the links. grewar.oosthuizen edebeer1 ddobrowsky mlouw1 cbekker jantheron greg.sparrow jurgens.dupreez herman.claassens agrobler sscheepers2 tverwey pedrie.vandermerwe frik.coetzee jdeklerk2 cstrydom jbeukes lmorris arno.cloete Disclaimer: This report may contain certain opinions, predictions and assumptions and has been compiled from a variety of sources. Accordingly, you use the information in this report ( this information ) at your own risk and should not rely on it as a substitute for obtaining any specific professional advice you require. Accordingly, First National Bank, a division of FirstRand Bank Limited ( FNB ) provides no warranties or undertakings of any kind, whether express, implied or otherwise, concerning this information, its accuracy and/or reliability. Neither FNB nor its holding company, subsidiaries or other group companies will be liable to you for any claims, demands, expenses, losses.