Just Released: "South Africa Agribusiness Report Q4 2013"

We hold a positive view on the South African agricultural sector and see particular growth potential in the grain and livestock sectors. Both sectors' growth will be boosted by regional export demand. The sugar sector also presents interesting growth opportunities, mainly thanks to renewed investment and improved technologies. Overall, the country's grain and livestock producers have been hit by recent hikes in grain prices and subdued corn supply on the domestic market. Margins have plummeted, and foreign competition for exports has made it even more difficult for producers to stay afloat. We believe the country's main companies, AFGRI, Rainbow Chicken and Astral Foods, can only see profitability bounce from current subdued levels.

Key Forecasts

* Sugar production growth to 2016/17: 17.3% to 2.2mn tonnes. This is based on our view that, over the long term, macroeconomic fundamentals, together with the increasing use of sugar for biofuels, will have a positive impact on sugar production levels.
* Poultry consumption growth to 2017: 23.8% to 2.1mn tonnes. As more South African consumers move towards diets containing higher levels of protein, poultry (predominately chicken but also turkey and duck) is increasingly being viewed as a convenient, healthy and affordable source of nutrition.
* Corn production growth to 2016/17: 16.1% to 14.4mn tonnes. This relatively high growth rate reflects the influence of base effects. Growth will be supported by an improved macroeconomic outlook and the introduction of new corn varieties that generate higher crop yields.
* Real GDP growth: 2.3% in 2013, down from 2.5% in 2012; predicted to average 3.3% over the five years to 2017. GDP per capita is expected to rise to US$11,578 in 2017 (from an estimated US$7,577 in 2012).
* Unemployment: 25.0% in 2013, from 26.0% in 2012, then to 22.0% by 2017.
* Consumer price inflation: 5.9% in 2013, up from an average of 5.7% in 2012.
* BMI universe agribusiness market value: 6.4% year-on-year (y-o-y) decrease to US$9.4bn in 2012/13; growth forecast to average 2.6% annually between 2011/12 and 2016/17.

Full Report Details at
- http://www.fastmr.com/prod/670691_south_africa_agribusiness_report_q4_2013.aspx?afid=301

Key Revisions To Forecasts

* Corn 2012/13 production revised down from 13.0mn tonnes to 11.4mn tonnes. This is in line with the most recent official estimates for the ongoing crop.
* Barley 2012/13 production revised up from 281,000 tonnes to 300,000 tonnes. Farmers have not switched away from barley as significantly as previously expected.
* Wheat 2012/13 and 2013/14 production forecasts revised lower. We expect more investment to be directed to corn in the medium term, and the country's dependence on wheat imports is likely to increase.
* Beef 2012/13 production revised up from 790,000 tonnes to 820,000 tonnes. This is in line with the most recent official estimates.

Industry Developments

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