Share

Weak agricultural commodities continue to slide

Harare - The weakness in the world’s agricultural commodity prices that began earlier in the year continued into the third quarter, the World Bank's latest Commodity Markets Outlook report revealed.

According to the report, the World Bank’s Agriculture Price Index declined nearly 1% from the second quarter into the third quarter, with most markets well supplied.

"Food commodities dropped one percent, reflecting softer prices for maize, rice, and other food items, although oils and meals prices gained 1% on the back of strengthening soybean prices."

Raw materials prices however slipped marginally.

As a result, the Agriculture Price Index is expected to ease slightly in 2017 before edging up over 1% in 2018 due to the current season’s reduced grain production.

"Grain prices are expected to remain broadly steady in 2017 and advance 2% in 2018. Oils and meals are expected to follow a similar path to grains."

The report noted that over the medium term, agricultural commodity prices are expected to increase only a cumulative 3% through 2020, a very small gain compared to the post-2011 decline.

Based on US Department of Agriculture’s October assessment- the sixth update for the current season - combined global supplies (beginning stocks plus production) of wheat, maize, and rice are projected to reach 2 896 million metric tons (mmt) this season, 8 mmt lower than in 2016-17.

The World Bank however said key risks to the forecast stem mainly from the supply side: energy and fertilizer prices, weather patterns, as well as trade policies and production subsidies aimed at supporting prices received by farmers. Grains and oilseeds are most likely to be impacted.

"Energy, a key input to most agricultural commodities, notably grains and oilseeds, affects the costs of production directly through fuel use and indirectly through chemical and fertilizer use.

"Should energy prices rise more than projected, upward pressure on grains and oilseeds can be expected. Conversely, lower energy prices could depress agricultural prices. Such risks, however, will impact 2019 prices since most of the decisions for the current crop season have been made."

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.2%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.2%
Platinum
910.50
+1.5%
Palladium
1,011.50
+1.0%
Gold
2,221.35
+1.2%
Silver
24.87
+0.9%
Brent-ruolie
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders