International commodity prices on the decline

Poor economic growth in China, coupled with general poor economic performance in the rest of the world, had resulted in a decline in global commodity prices, according to Wessel Lemmer, senior agricultural economist at Absa.

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Speaking at this year’s Free State buffalo breeders’ workshop in Allemanskraal, Lemmer said crude oil prices could reach US$41/barrel in 2016.

Global maize prices had declined by 36% since 2013. “Wheat prices showed the largest decline of 42% since 2013.

Indications are that agricultural commodity prices will bottom-out in 2016,” Lemmer said. The crop traded at $259/t in 2013 and was expected to decline to $165/t in 2016. Soya bean prices had declined by 20% and soya meal by 38%.

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It is expected that international maize, soya bean and oilcake prices would marginally by between 3% and 4% in 2017, and wheat prices by between 4% and 5%.

“Indications nevertheless are that the rand will devaluate to R16,60/US$1 in July 2016. The rand is expected to weaken further year-on-year, to a level of R18,40/US$1,” he said.