porcus - sappo

utrition
The year ahead is again characterised with high volatility
in agricultural markets which is driven by a number
of external macro-economic factors. The strengthening
of the link between energy and agricultural markets is
probably the key driver behind increased volatility. In the
medium term, the Rand exchange rate against the major
currencies remains a key driver which impacts on both the
cost of inputs and the output price. The general consensus
is that the Rand exchange rate will remain volatile with
a depreciating trend against the Dollar and Euro, mainly
due to the raising concerns of fi nancial markets in the
Euro Zone and the United States. Domestic stock levels
of maize will remain under pressure until the new marketing
season. Therefore, the price of key commodities could
trace import parity prices for another couple of months.
The high yellow maize price together with other expensive
inputs place signifi cant pressure on the profi t margins of
livestock farmers due to higher feed costs.
Farm level analysis
4
Market conditions
Information supplied by Divan van der Westhuizen of the Bureau of Food and Agricultural Policy (BFAP)
Figure 1: Index for requisites and auction prices
The requisites and auction price index focuses on the pork
auction price on the hook and the pork input cost index. The
key driver in the pork requisites index is the yellow maize SAFEX
price, followed by the soybean cake price. The latest update
from the BFAP pork industry index analysis for January 2012 includes
the latest projections based on the BFAP livestock model.
Due to the higher cost of maize it is projected that the pork
auction price on hook could increase by 20% from 2011 to
2012. The average projected pork auction price on hook for
2012 is R20.61/kg. The input/requisites index for pork production
may increase by eleven percent from 2011 to 2012. The
index value (base year = 2000) for the requisites and pork auction
price in January 2012 was 311.9% and 265.1% respectively.
The pork to maize price ratio provides an indication of profi tability
of pork producers. A sideways movement occurred from
December to January in both the ratios for PP and BP products.
A higher maize price together with higher auction prices for BP
and PP products caused the sideways movement. The ratio for
PP products has increased from November towards January
by two percent. However, a slight decrease of 3.6% occurred in
the BP ratio. The ratio for PP and BP meat classes in January
were 8.74 and 7.78 respectively (Figure 2). For the same period
in 2011, the ratios were 11.10 and 10.65 respectively, which
indicates that profi tability margins were higher in January 2011.
Figure 2: Pork to maize price ratio
The bullish trend continued in the yellow maize market mainly due
to local stock levels which remained under pressure. Local supply
and demand will play a signifi cant role in grain markets in the medium
term which implies that the yellow maize price will probably
follow import parity prices until the new stock arrives in April/May.
The yellow maize price traded at R2 360/ton in November 2011
where it further increased by 10.99% towards January. The yellow
maize price traded on average at R2 620/ton in January 2012. On
a year-to-year basis, the yellow maize price in January was 77%
higher than in the same period in 2011. Given normal mid-summer
weather conditions, the current crop will compensate for low stock
levels and the price of key commodities may trade back to export
parity levels towards June/July.
The auction price of pork products reacted to the increase in
the yellow maize, especially during the last two months of 2011
(Figure 3). Towards January, the price response was at a slower
pace. The price of PP quality meat in the middle of January was
R22.91/kg, approximately 2.69% higher than December. For the
same period in 2011, the price of PP pork meat was R16.40/kg.
Figure 3: Pork price and YM SAFEX price
International
Pork exports to Russia have continued its increasing trend during
2011. Increased imports of fresh and frozen pork, mainly from
Canada and the United States were a result of the increasing
demand in Russia. Brazil, which is a major supplier of pork meat
to Russia, has lost some of its market share due to increasing
competition from the Euro Zone and a temporary import ban on
some Brazilian products from processing plants in three states.
In addition, pork imports from Germany were temporarily banned
Porcus Januarie/Februarie 2012