Fuel prices likely to increase in October

Hopes for a continued decline in petrol and diesel prices have been dashed.

- Advertisement -

The Central Energy Fund recently announced that preliminary estimates suggested that national petrol prices would likely increase by an average of approximately 44c/litre and diesel by approximately 14c/litre on 5 October.

Wandile Sihlobo, Agbiz head of economic and agribusiness intelligence, said the key drivers behind the expected fuel price increases were the weakening rand against the US dollar and relatively higher Brent crude oil prices.

“This month the rand weakened by 3% against the US dollar, averaging R14,29 compared to R13,79 in August. At the same time, Brent crude oil prices averaged US$47,60 (about R700) a barrel, up by 1% from the August average of US$47,07 (R674,06) a barrel,” said Sihlobo.

- Advertisement -

In late August, both Agbiz and commodity organisation Grain SA had expressed the hope that the combination of the strengthening rand and Brent crude oil prices remaining below US$50/barrel would continue for the remainder of the year.

In the months leading up to early September, SA had experienced welcome decreases in fuel prices as a result of a strengthening rand and low Brent crude oil prices.

Petru Fourie, Grain SA research co-ordinator and production cost analyst, told Farmer’s Weekly last month that SA’s grain producers were currently under major financial pressure due to the effects of the three-year long drought. “So any type of decrease with regards to any of the [production] inputs is positive,” she said.

Agbiz reiterated that in SA’s grain production, fuel accounted for approximately 11% of total variable costs.

“Grain sowing activity is set to commence next month in the eastern regions of SA. Therefore, it would be ideal for farmers and agribusinesses in these respective areas of the country to consider stocking fuel before the end of this month,” said Sihlobo.

He explained that, by doing so, farmers could potentially save 3% for every litre of petrol and 1% for every litre of diesel they purchased before October’s fuel price hikes.