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Improvement in feed costs to lead to more favourable feed: milk price ratio

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Livestock - [http://a57.foxnews.com/images.foxnews.com/content/fox-news/health/2012/03/30/hormones-in-cows-and-what-it-means-for-your-health/_jcr_content/par/featured-media/media-1.img.jpg/876/493/1421940347953.jpg?ve=1&tl=1] Livestock - [http://a57.foxnews.com/images.foxnews.com/content/fox-news/health/2012/03/30/hormones-in-cows-and-what-it-means-for-your-health/_jcr_content/par/featured-media/media-1.img.jpg/876/493/1421940347953.jpg?ve=1&tl=1]

The latest Crop Estimate Committee report (CEC) showed that a total of 14.5 million tons of maize is likely to be produced in 2017. The estimated maize crop is 87% higher than the crop in 2016. As a result, maize prices have declined. This bodes well with the feed intensive industries as it suggests a decline in the cost of feed from the high levels seen during the past season. Lower grain prices have resulted in an improvement in the milk: feed price ratio. Ultimately, the decline in the grain prices as well as possible increases in the producer prices will support improved milk: feed price ratio, thereby increasing the profitability of milk production.

Highlights

Livestock

  • Domestic livestock prices may retain its current positive momentum due to strong demand and improved consumption into the long weekend.
  • An average national Class A beef prices breached the level of R48/kg over the past week. This price increased from about R39/kg the same time a year ago.
  • Weaner calf prices have increased to R30.28/kg this week on the back of improved demand and less available supplies. This price increased from R20.10/kg the same time a year ago.
  • The outlook for livestock prices is positive for 2017 with higher beef, lamb and mutton prices, lower feed costs and favourable grazing conditions expected to benefit the industry. The higher expected crop of 14.5 million tons of maize likely to be produced in 2017 is favourable for the feed intensive businesses.

Limited silo capacity may add more pressure to maize price.

South Africa’s much anticipated large maize crop of about 14.3 million tons has raised a concern for silo capacity in particular areas, especially in the regions with great yields and limited facilities. Greater yields were achieved than initially anticipated in major maize producing parts of the country, thanks to favourable weather. Some market players are even expecting a crop size between 14.3 and 14.5 million tons. Some areas in the Free State region have reported a concern in terms of storage capacity. Bunkers and other alternative storage facilities are already being placed to address the great harvest. But should capacity be filled, producers will have to travel further to locate silo’s that have availability, adding more to the price pressure.

Highlights

Grains & Oilseeds

  • South Africa’s expected exportable surplus may receive competition from the Zambian exportable crop, after the ban on exports had been lifted in Zambia.
  • The latest import duty is R1190.19, compared to the expected import duty of R1371.75
  • Prices will enjoy increased underlying support if market/negotiating power lead to higher domestic bids being accepted.
  • South Africa is expected to crush 1.9 million tons of oilseeds on increased demand and expansion in crushing capacity.

Vegetables

  • The Easter holidays had most vegetable (tomatoes, onions, carrots, peppers) prices soaring high. The week ending 21 April, saw all the above mentioned vegetables take a downward price trend, because of larger volumes and little demand, post closure of the markets for the holidays.
  • Most labourers are back from holidays, and pickings of peppers should resume, adding more price pressure.
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