Perspektief | Perspective Week 46 - 2017

17 Nov 2017

OVERVIEW OF INPUT PRICE TRENDS

Fuel prices for December 2017

According to the latest information from the Central Energy Fund, diesel prices can rise by 63 cents per litre on 6 December, while the petrol price may increase by 74 cents per litre. Both higher crude oil prices and a weaker rand contribute to these expected increases.

Fertiliser price trends

International versus local fertiliser price trends:
Since the majority of SA's fertiliser needs has to be imported, international price trends can be used to predict domestic price movements.

Internationally, prices have been used in certain ports while domestically average prices of various fertiliser companies are used for the purpose of capturing comparative year-on-year trends and not necessarily on the physical price.

Table 1 indicate global price trends in dollar terms, while Table 2 shows the same prices in rand value. International fertiliser prices (especially nitrogen) have started to increase sharply as of July 2017 following a declining trend. The rand has strengthened by 1.7% over a year, which should be favourable for imported fertilisers. Table 2 indicate international fertiliser prices, in rand value, have risen between 2.8% and 60% over a year-period. Nitrogen, especially has risen sharply, with Ammonia 60% and Urea 28% respectively. During the previous month alone, the price of Ammonia increased by 12% and the price of Urea increased by 16%.

Table 1: International fertiliser prices in dollar value
	October 2016	October 2017	% change
Fertiliser	Dollar/ton	Dollar/ton	%
Ammonia (Middle-East)	162	264	+63%
Urea (46) (Eastern Europe)	202	263	+30%
DAP (US Golf)	330	345	+4.5%
KCL (CIS)	218	236	+8.3%
Rand/Dollar exchange	13.93	13.70	-1.7%

Table 2: International fertiliser prices in rand value
	October 2016	October 2017	% change
Fertiliser	Rand/ton	Rand/ton	%
Ammonia (Middle-East)	2 257	3 617	+60%
Urea (46) (Eastern Europe)	2 814	3 603	+28%
DAP (US Golf)	4 597	4 727	+2.8%
KCL (CIS)	3 037	3 233	+6.5%

Table 3 indicate how local fertiliser price trends moved over a year-period. In addition to local MAP prices, all raw materials have increased over the year-period. Local nitrogen prices did not increase to the same extent as international prices.

Table 3: Domestic fertiliser prices
	November 2016	November 2017	% change
Fertiliser	Rand/ton	Rand/ton	%
KAN (28)	5 033	5 733	+14%
Urea (46)	5 462	6 463	+18%
MAP	8 921	8 631	-3.3%
KCL	6 321	6 721	+6.3%

Agricultural Chemicals

Essentially 100% of the active ingredients needed to manufacture agricultural chemicals are imported. International trends and the exchange rate will therefore play a decisive role in domestic pricing.

Tables 1 to 4 indicate trends in international agricultural chemicals (active ingredients) prices in a Chinese port. Tables 2 and 4 indicate international prices in rand value. The rand has strengthened by 1.7% over the period from October 2016 to October 2017.

As far as herbicides are concerned, all active ingredients show sharp increases in rand value year-on-year. Atrazine prices increased by 20% while glyphosate prices increased by 33%.

Table 1: Herbicide prices: International in dollar value

International herbicide prices - Year-on-year change ($/t)
	Oct-16	Oct-17	% change
	USD/t	USD/t	%
Glyphosate (95%)	3 116	4 225	+35.6%
Acetochlor (92%)	2 684	3 149	+17.3%
Atrazine (97%)	2 595	3 176	+22.4%
Metolachlor (97%)	3 457	3 915	+13.2%
Trifluralin (95%)	4 392	4 500	+2.5%
R/$	13.94	13.70	-1.7%

Table 2: Herbicide prices: International in rand value

International herbicide prices - Year-on-year change (R/t)
	Oct-16	Oct-17	% change
	R/t	R/t	%
Glyphosate (95%)	43 437	57 876	+33.2%
Acetochlor (92%)	37 416	43 146	+15.3%
Atrazine (97%)	36 178	43 512	+20.3%
Metolachlor (97%)	48 186	53 629	+11.3%
Trifluralin (95%)	61 228	61 656	+0.7%

When reviewing insecticide prices, the most actives indicate sharp rising trend in dollar as well as in rand values. According to China's market reports, the state implements very strict pollution legislation, which meant that many plants had to close. This has sharply reduced the supply of insecticides and pushed prices sharply upwards.

Table 3: Insecticide prices: International in dollar value

International insecticide prices - Year-on-year changes ($/t)
	Oct-16	Oct-17	% change
	USD/t	USD/t	%
Imidacloprid (95%)	14 343	29 917	+108.6%
Lambda-cyhalothrin (95%)	19 732	29 590	+50.0%
Carbofuran (99%)	9 750	10 787	+10.6%
Deltamethrin (98%)	57 132	103 116	+80.6%
R/$	13.94	13.70	-1.7%

Table 4: Insecticide prices: International in rand value

International insecticide prices - Year-on-year changes (R/t)
	Okt-16	Okt-17	% change
	R/t	R/t	%
Imidacloprid (95%)	199 947	409 862	+105%
Lambda-cyhalothrin (95%)	275 063	405 382	+48%
Carbofuran (99%)	135 918	147 783	+8.7%
Deltamethrin (98%)	796 414	1 413 377	+78%

WESTERN CAPE FALL ARMYWORM SURVEILLANCE
Dr Marinda Visser, Manager: Grain Research & Policy Centre, Grain SA

The introduction of Fall Armyworm, a highly invasive pest into South Africa, has led to the establishment of a permanent FAW steering committee. The national status of the pest, surveillance, diagnostic capacity, damage assessment, pest management and control regulations are the points of deliberation for this committee.

Grain SA, SANSOR and the Department of Agriculture Forestry and Fisheries (DAFF) contracted CROP WATCH AFRICA to setup an area wide surveillance grid in the Western Cape to monitor for the presence of the Fall Armyworm (FAW), a newly introduced invasive pest in South Africa. During the three-month period of surveillance, no Fall Armyworms were detected in the traps in all localities surveyed.

With the end of the production season in the Western Cape, continuous surveillance of Fall Armyworm will remain a high priority. Over the next couple of months, the approach will change from area wide surveillance to early warning. Adopting this approach will ensure that if Fall Armyworm does enter the Western Cape, it will be detected and farmers can be made aware of the risks for the next season.

AGRICULTURAL WRITERS SOUTH AFRICA VISITS GRAIN SA CHAIRMAN

With the recent plant intentions of the National Crop Estimate Committee, it is clear that there is diversification in producers' plans. It is expected that soybean hectares will increase by 25,4%. With the year's expected carry over stock of 236 432 ton, which is just over 2.5 months' stock, there are many questions about whether South Africa can handle an expansion. To answer this, one has to look at the current season and then the possibilities of the coming season.

With great excitement, nearly 20 agricultural writers climbed the bus crack of dawn for a visit to Jaco Minnaar, Chairman of Grain SA's Botesrust farm in Hennenman. Jaco provided journalists with a complete overview of his grain production activities, as well as that of the industry. Dr. Dirk Strydom, Manager: Grain Economics & Marketing concluded with an insightful overview of the industry, challenges and trends.