17.05.2017

SA agricultural sector likely to get a 2% relief on diesel price next month

Diesel (0.05% Wholesale Inland) and petrol (95 ULP Inland) prices could decline by 21 cents per litre (c/l), respectively, on 7 June 2017 - Wandile Sihlobo, Agbiz economist.

View PDF

Agribusinesses and farmers could be paying 2% less for a litre of diesel and petrol next month. Diesel (0.05% Wholesale Inland) and petrol (95 ULP Inland) prices could decline by 21 cents per litre (c/l), respectively, on 07 June 2017. This could bring the wholesale diesel price down to R11.59 per litre from R11.80 per litre. The retail price of petrol could ease at R13.58 per litre from the current level of R13.79 per litre. Although this expected fuel price decrease is marginal, it is of importance as it coincides with a high fuel consumption period in the agricultural sector - harvesting period for summer crops (with expected large harvest of maize) and a planting period for winter crops.

This expected fuel price decrease is largely on the back of lower Brent crude oil prices, which averaged US$50 a barrel this month, down 7% from April 2017. The ZAR/USD exchange played a minimal role, after strengthening by just 0.3% from the previous month, averaging R13.42 this month.

The agricultural sector will benefit from a decrease in fuel prices, as this coincides with the harvesting period for the summer crops growing areas of the country. Although the harvest activity has already started, a large part of maize and sunflower seed have not been harvested yet. The harvest activity could gain momentum towards month-end or early June 2017. Moreover, agribusinesses that are operating in the grain and oilseeds industry will also get relief. Fuel costs make up roughly 11% of grain farmers’ production costs in South Africa. About a third of this is typically utilised during harvesting season.

At the same time, winter grain planting has not progressed much due to dryness. Therefore, winter grain farmers could also benefit from expected fuel cuts when planting conditions start to improve.



Enquiries:
Wandile Sihlobo
(wandile@agbiz.co.za)

Disclaimer: 
Everything has been done to ensure the accuracy of this information, however, Agbiz takes no responsibility for any losses or damage incurred due to the usage of this information

Agbiz Members

  • Absa AgriBusiness
  • Afgri Operations Ltd
  • Afrivet
  • Agri Expo
  • AFMA
  • Agrifusion
  • Agri Mega Group
  • Alltech (Pty) Ltd
  • Association of Agritourism South Africa (AASA)
  • AVCASA
  • Barloworld Handling Materials
  • Bathopele
  • Beefmaster
  • BKB Ltd
  • Capespan
  • Certisure
  • Citrus Growers Association
  • Durban Fresh Produce Market
  • East London Industrial Development Zone
  • Engen
  • Farmwise Grains (Pty) Ltd
  • FNB
  • Fraserburg Koöp Bpk
  • Fresh Produce Exporters' Forum (FPEF)
  • GWK Limited
  • Highveld Egg Co-op Ltd
  • Hans Merensky Holdings
  • Humansdorpse Koöp Bpk Trading as The Co-op/Die Kooperasie
  • Industrial Development Corporation
  • Institute of Market Agents of SA (IMASA)
  • John Deere
  • Kimech Agri Tractor and Machinery CC
  • Kaap Agri Bedryf Ltd
  • KLK Landbou Bpk
  • Land Bank
  • Marsh Africa
  • Monsanto
  • Mosstrich Ltd
  • Mutual & Federal Agri
  • National Agricultural Marketing Council (NAMC)
  • Nedbank
  • Netafim
  • PMI SA
  • NWK Ltd
  • Obaro
  • Old Mutual
  • Overberg Agri Bedrywe (Edms) Bpk
  • OVK Operations Ltd
  • Pioneer Hi-Bred RSA (Pty) Ltd
  • PwC South Africa
  • Rovic Leers
  • SA Agri Academy
  • Saltcor
  • San Miguel Fruits SA
  • Sansor
  • Santam Agriculture
  • Senwes Ltd
  • Signa
  • Standard Bank Agriculture
  • SSK
  • Suidwes Agriculture Ltd
  • Sundays River Citrus Company (Pty) Ltd