In February, the worldwide meals commodity value index, used as a benchmark, recorded its 7th consecutive decline, in line with the Meals and Agriculture Group of the United International locations (FAO).
Picture: FW Archive
This pattern used to be pushed through reduced global costs of main cereals, which outweighed the will increase seen in sugar and meat costs.
The FAO Meals Worth Index, which tracks per month adjustments within the global costs of a suite of worldwide traded meals commodities, averaged 117.3 issues in February, down 0,7% from January and 10,5% from the similar month a yr in the past.
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The FAO Cereal Worth Index reduced through 5% in February to achieve a degree 22,4% under that of February 2023.
In keeping with the FAO, maize export costs dropped essentially the most amid expectancies of huge harvests in South The usa and aggressive costs presented through Ukraine, whilst global wheat costs declined most commonly because of a robust export tempo from the Russian Federation. Global rice costs additionally declined through 1,6% in February.
“The FAO Vegetable Oil Worth Index reduced through 1,3% from January to face 11% under its February 2023 price,” FAO stated in a observation.
The FAO Sugar Worth Index, against this, rose 3,2% in February, whilst the FAO Meat Worth Index rose through 1,8% from January, with poultry meat quotations emerging essentially the most, adopted through the ones for bovine meat, impacted through heavy rains disrupting farm animals transportation in Australia.
“The FAO Dairy Worth Index larger through 1,1%, led through upper import call for from Asian consumers for butter. Costs of milk powders and cheese additionally rose marginally,” the FAO stated.
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Commenting at the decline, Agbiz leader economist Wandile Sihlobo stated there have been plentiful grain provides within the world marketplace, with the 2023/24 world maize harvest forecast at 1,2 billion heaps, up 6% year-on-year (y/y), in line with information from the Global Grains Council (IGC).
“The IGC forecasts that the 2023/24 world wheat harvest will succeed in 788 million heaps, which is definitely above the long-term reasonable ranges (albeit down 1% y/y). There could also be a large number of rice globally, with the 2023/24 world harvest forecast at 511 million heaps, smartly above the long-term reasonable (however down 0,6 y/y). The 2023/24 world soya bean harvest is estimated at 391 million heaps, up 5% y/y.”
He stated those world manufacturing forecasts additionally implied a basic development within the shares of those main commodities and a moderation in costs.
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“Nonetheless, South Africa faces rather relatively other dynamics on account of the heavy drought this is negatively affecting the harvest potentialities, specifically maize, soya beans and sunflower seeds. There will probably be tight provides locally, particularly white maize, and we already see the response on SAFEX costs that experience larger significantly over the last few weeks.”
Dawie Maree, head of data and advertising and marketing at FNB Agriculture, stated the decline in meals costs used to be a double-edged sword for South Africa.
“At the one hand, it is excellent news when it comes to meals inflation forecasts for the patrons, particularly in the ones commodities which South Africa is a internet importer in, like wheat and rice. However the turn aspect is that manufacturers can be expecting downward power on commodity costs, if one considers that almost all of our native commodity costs are related to the global marketplace.
“If this decline within the index continues, we will be expecting that meals inflation will stabilise, which in flip bodes smartly for rates of interest on global degree. It may be anticipated that global central banks may get started taking into consideration decreasing rates of interest.”
Maree stated the not-so-good information used to be that native meals inflation in South Africa may well be upper for longer, which means that that the South African Reserve Financial institution may well be compelled to stay rates of interest upper for longer.
“The present problem is the pointy build up in maize costs, particularly white maize, on account of the drought prerequisites and critical warmth this is skilled over the principle white maize generating spaces.”
