89
October 2013
Focus on livestock
Prices have been in an upward swing to 2012, but following the recent
drought that caused a significant reduction in stock numbers while
simultaneously putting pressure on the 2013 price, the price is expected
to increase significantly in 2013. Following a period of volatility, prices are
anticipated to increase steadily from 2016 onwards. With a projected an-
nual average growth rate of 6%, nominal beef prices will reach R47/kg in
2022, which implies that an expected inflation rate of approximately 5%
over the next decade, beef prices will increase marginally in real terms.
When maize prices are low, maize producers who also have a livestock
production enterprise, typically aim to realise a higher value for their
maize by feeding it to calves that are not marketed immediately. Con-
sequently, in years where maize prices are exceptionally low, calf prices
tend to increase rapidly as the calf supply contracts in the short term. If
beef prices are not supported by a strong demand for beef, the result
is that calf prices as a percentage of beef prices increase rapidly, which
Continued from page 86
Taking a look at
global meat prices
holds a significant risk for the producers since beef prices could come
under pressure when these animals are finally sold.
After increasing sharply in 2011 on the back of high international prices
and an ever increasing demand for lamb following the recovery from the
financial crisis, the lamb price decreased significantly in 2012. This de-
crease followed an increased supply by New Zealand and Australia as the
effect of recovering herd numbers began to show, combined with lower
demand from the EU due to the debt crisis leading to a sharp decline
in international prices. As a net importer of lamb, the domestic price in
South Africa followed.
The lamb price is expected to increase at an annual rate of 4,4% over the
outlook period in nominal terms. This is less than the expected inflation
rate of 5%, leading to relatively constant prices in real terms and only a
small increase in production over the outlook period.
SA Graan/Sasol Nitro
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