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.

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%.

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.