Tuesday, March 07, 2017

South African Agriculture Sector on the Mend After Crippling Drought
Grain prices have steadily fallen since their record peak in the first quarter of 2016, supported by expectations of higher grain production and a stronger rand

07 MARCH 2017 - 16:53 PM
ANDRIES MAHLANGU
South African Business Day

The agricultural sector contracted for its eighth consecutive quarter, but at a much lower pace, fuelling optimism about a rebound in 2017 after a punishing drought over the past two years.

Grain prices have been on a steady decline since their record peak in the first quarter of 2016, supported by expectations of higher grain production and a stronger rand.

The production of maize, which is used as input in food production, is estimated at 13.9-million tonnes in 2017, which is nearly double that of 2016.

White maize for July delivery settled at R1,908 per tonne on the JSE’s commodity derivatives market, after spiking north of R5,000 a little more than a year ago.

Agriculture contracted 0.1% in the three months to December, according to the latest Statistics SA data, marking a sharp turnaround from 2015, when the sector contracted 20% at one point.

"These results mirror the aftermath of the 2015-16 El-Niño-induced drought," said Wandile Sihlobo, an analyst at Agricultural Business Chamber.

"The entire agricultural sector was negatively affected by this weather phenomenon, but the most notable decline was in the grain and oilseeds, livestock and poultry sector."

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