The Economy the Past Week

5-Global-Economy

Johan Willemse, Agricultural Economist

After steadily increasing by 13.1% over five consecutive months (from July to November 2017) the moving average of the national number of pigs slaughtered decreased by 4.5% from November to December 2017. During the same period the average pork price increased by 2.1%. In the most recent week of reporting the average pork price was 7.66% higher than during the same time last year at R28.51/kg.

The profitability indicators for porkers and baconers decreased slightly over the past month: by 0.58% and 1.20% respectively. But profitability indicators remain significantly higher (77% and 70% respectively) compared to the same time last year. The wholesale margin indices increased by 6.8% and 5.3% for porkers and baconers over the last quarter and increased 21% and 19% with respect to the same time last year.

Following the outcome of the ANC elective conference in December, the Rand has appreciated significantly against key currencies such as the Euro and the US dollar, which will affect prices going forward.

Figure 1 and Figure 2 contain the latest levy administrator’s statistics. In December 2017 a total of 193 982 pigs were slaughtered in South Africa, a significant decline from the 249 606 pigs slaughtered in November 2017. The three-month moving average (MA) of slaughter numbers is shown in Figure 1 since actual month-on-month changes are very volatile. After steadily increasing by 13.1% over five consecutive months (from July to November 2017), the MA of the national number of pigs slaughtered decreased by 4.5% from November to December 2017.

This is a typical pattern related to the festive season’s increased demand relative to the beginning of a new year.

During the months running up to the festive season (September to November 2017) a larger portion of the national slaughters (more than 70%) originated from the top three pork producing provinces: Gauteng, KwaZulu-Natal and the Western Cape. The number of pigs slaughtered in this three provinces are shown explicitly in Figure 2.

From Figure 2, the 48% decline in pig slaughters in Gauteng in December 2017 is striking. Note that the latest figures are usually preliminary releases from the levy administration and are subject to change for a couple of months and again, the festive season demand swings are key drivers in the slaughter numbers this time of year. On the other hand, the number of pigs slaughtered in the Western Cape remained relatively high (above 50 000 pigs) and decreased by only 1.7% from November 2017 to 51 022 pigs in December 2017. The number of pigs slaughtered in KwaZulu-Natal remained stable throughout 2017 at an overall average of 27 920 pigs and also decreased marginally in December 2017 to 27 403 pigs (9.7% decline from November 2017).

The total number of pigs slaughtered in South Africa in December 2017, declined by 20.1% with respect to December 2016. Gauteng was the biggest contributor to this decline with a year on year decline of 43.8%. KwaZulu-Natal slaughtered 8.8% fewer pigs in December 2017 than in December 2016. The Western Cape slaughtered 1.5% more pigs in December 2017 compared to last year.

A moving average of 227 835 cattle were slaughtered in December 2017, representing a less than 2% increase from November and a 16% decline from December 2016. The MA number of sheep slaughtered in South Africa increased by almost 9% from almost 388 000 sheep in November 2017 to  424 000 sheep in December 2017.

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