Looking Ahead
Our view is that average yearly prices could increase over the coming three years, although this could be associated with notable variations around these averages. Global analysts of pork/hog cycles note that large swings in pork prices are typically associated with limited
processing capacity and as the share processing capacity increases relative to the size of the herd, herd cycles become less variable. In the South African context, an additional factor to consider is that pork consumption is highly sensitive to price variations in pork itself, but also relative to prices of other meat. Given this context, our upward trend over the coming years is driven by:
• Firmer poultry prices due to exchange rate movements, likely to create price momentum in pork. • The effect of higher poultry prices are however likely to be offset, at least to some extent, by pressure on red meat prices over the coming months. • Feed costs are also projected to ease as global grain and oilseed production responds to high agricultural commodity prices. But local cost pressures related to load-shedding, specifically, could counter this. Although feed costs are declining, the cost of load-shedding is keeping production costs elevated
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