OPINION

Polmac Srl Spraying Equipment

Strong meat prices signal expensive braais in December

By: Paul Makube, Senior Agricultural Economist at FNB

With Christmas only five weeks away, upside in the short term on improved seasonal the current trend in meat prices signals demand. The post-Covid-19 long term demand prospects of expensive braais during outlook however remains a concern given the 2020 December festive season. Seasonal the high prospects of the weak economy and demand for meat remains solid and has subsequent contraction of job numbers. outweighed the relatively higher slaughter rate in the livestock complex, which would normally Pork have resulted in lower prices due to the increased The upswing in the pig market continued with availability of the product. The pace of livestock pork producer prices retaining levels above slaughter has been relatively strong with cattle, R30/kg due to the resilient demand and tighter sheep and pigs number slaughtered way above volumes. Prices are now 15% and 9% higher the 2019 levels. from the 2019 levels respectively for pork and At this rate, the monthly consumer price inflation and 36% relative to the 3-year average for for meat is expected to remain sticky on the this time of the year. The current uptick in pig upside relative to last year in the next Statistics South Africa (Stats SA) update. The meat CPI increased by 4.4% y/y during September 2020 in the last Stats SA release. carcass prices will continue underpinned by renewed demand as we approach the festive period. The rising maize prices in the near term and consequently higher feed costs however Beef The A grade beef prices have for the first time remains a concern as they will reduce producer margins. breached the R50/kg mark due to higher demand and are currently over 15% above the 2019 levels. Good grazing conditions due to rains in some areas bodes well for prices in the medium Chicken Unlike other meat types, the situation with chicken is that its product categories show a term as producers will hold on to stock for a bit mixed trend with downward pressure for fresh longer. However, other areas are yet to recover whole birds while the frozen whole birds and fully as evidenced by recent fires in parts of the IQF strengthened relative to the 2019 levels. Free State. The current strength in beef prices Higher feed costs have significantly narrowed is likely to be maintained as we head closer to producer margins, thus necessitating upside the festive period. Nonetheless, farmers wouldn’t pricing in line with red meat but in a competitive necessarily smile all the way to the bank as the trading environment where this cheaper source combination of the relatively high weaner calve of animal protein is often used as a loss leader. prices and the elevated grain prices squeeze baconers and are both sharply higher by 37% feeding margins in the short term. All intensive livestock categories face high feed input cost pressures as yellow maize prices, a Sheep major feed ingredient, averaged R3 342/ ton At current levels, lamb and mutton prices are 28% in the last three months which is 24% higher and 40% higher respectively relative to the 2019 year-on-year (y/y). This was underpinned by the levels and are 15% and 16% above the 3-year strong export demand despite a huge harvest, average for this time of the year. We expect with China accounting for 28% of total exports prices to retain the sideways trend but with further for the 2020/21 marketing season. Polmac Srl has been in the market of machines for the distribution of agriculture pesticides and herbicides since 1972. Our products are produced to control and measure the management, mixing and distribution of chemicals in agriculture, in order to reduce to a minimum the environmental impact and contact with these products by operators. Greater precision in dosing, more safety in performing activities, compliance with the most stringent rules and the best end results. Our primary objective had been that of designing and manufacturing a complete weeding machine targeted exclusively for the Italian market. Over time, we specialized in the production of components and accessories for machines for the distribution of pesticides and herbicides, while also expanding our sales in foreign countries. Every year we invest a significant share of our turnover in Research & Development. Thanks to our specialist team we produce technical drawings, prototypes and new production moulds, while maintaining constant product innovation and customization to satisfy the requirements of the Italian and International market.”