- The latest update on global food inflation is that it has now rebounded after trending in negative territory for the 21-month period until August 2024, according to data from the United Nation’s Food and Agriculture Organization (FAO).
- Global food inflation rallied to the highest level since October 2022 at 5.6% y/y on the back of gains across all commodities except for meat. However, the monthly trend showed a slowdown of 0.6ppt from September at 2% m/m in October 2024.
- In the meat category, the monthly trend showed a second consecutive decline of -0.3% m/m in October underpinned by significant decreases for pig meat and poultry prices which more than offset gains for beef and the stable ovine meats. The increased availability of exportable supplies amid a depressed import demand curtailed the monthly price growth. However, the annual FAO meat inflation surged to a 25-month high of 7.5% y/y in October 2024 with ovine meat prices posting strong gains of 39.4% y/y, followed by poultry, bovine, and pig with increases of 8.1%, 2.1%, and 8.0% y/y respectively.
- Meanwhile, the United States Department of Agriculture (USDA) projected a marginal decline of 0.2% y/y in global beef exports at 10.42 million tons for 2025 led by decreases of 12% and 7% y/y for the US and the EU respectively. Chinese imports slowed in the four consecutive months to September at 166,000 tons due to constrained consumer spending.
- Brazilian exports are reported to have increased during August and September with the latter’s volumes up 29% y/y at 251,756 tons mainly destined for the Chinese market. The USDA expects the 2025 Brazilian beef exports to increase marginally by 0.7% y/y to 3.6 million tons (figure2).
- On the chicken front, the USDA projections indicate a good rebound of 2% y/y in global exports at 13.85 million tons for 2025 underpinned by increases of 2% y/y for Brazil and the 1.7% y/y for the US after a sharp decrease of -7.4% y/y.
- The USDA forecasted a slowdown of global pork exports to 10.42 million tons in 2025, reflecting an annual growth of 1% from 2% in 2024. Strong expected US export sales of 3.4% y/y more than offset declines of 1.7% y/y from the European Union. From a 31.5% drop in pork imports in 2023, China is expected to rebound by 7.7% y/y to 1.4 million tons in 2025.
- The latest US pork export data from the US Meat Exporters Forum (USMEF) shows a massive decrease of 12% y/y at 344,432 tons in shipments to China for the year to September 2024. The lingering tariff war between the US and China following the election of President Elect Donald Trump may accelerate the decline in US shipments to the country.
South Africa’s inflation has remained downbeat so far in 2024
- No respite for the meat producers as SA meat inflation remained subdued so far in 2024 after reaching the only high of 2% y/y recorded in January 2024 (figure 3). Meat inflation cooled to 0.9% y/y in September 2024 but had a marginal bump up of just 0.2% m/m on seasonal demand effects after two consecutive monthly declines of 0.4% for both July and August.
Average livestock prices continue to trend sideways as seasonal demand conditions remain subdued
- Our analysis of trends on the domestic market shows a sideways trend across the board early in November relative to last month, which signals weak seasonal demand conditions.
- Annually, the trend is still negative with porkers and baconers posting the biggest decreases of just over 11% y/y (-R4/kg).
- They are followed closely by frozen whole birds, fresh whole birds, and the individually quick-frozen portions (IQF) with decreases of 7.6% (-R2.80/kg), 6.0% (-R2.19/kg), and 4.8% (-R1.57/kg) y/y respectively.
- In the live market, the weaner market edged a bit higher on renewed demand and further supported by recent rains that improved pasture prospects in the livestock areas.
- Although advancing modestly by 4% (+R1.27/kg), the average weaner calf prices for the first two weeks of November 2024 were still down by 7.8% (-R2.66/kg) y/y at R31.50/kg live weight (LW) as illustrated in figure 4.
- We saw a similar trend on the chicken side with monthly gains but annually coming in on the downside particularly the individually quick frozen (IQF) category which posted the biggest drop of 8.9% (-R2.99/kg) y/y at R30.67/kg.
- For beef, weaner calf prices extended the trend in deflationary mode relative to the 2023 levels since mid-June 2024. Carcass prices are now back in negative territory reflecting the tough demand conditions.
- Pork price growth continued to decelerate while chicken remained in negative territory (see figure 3b and c).
OUTLOOK
- The improved prospects for an upswing in seasonal demand for meat on the back of the benign inflation outlook, another rate cut before the end of year, and a further reduction in fuel costs should provide a breather for the cash strapped consumers.
- For producers, elevated feed costs remain a concern in the near term. Nonetheless, the longer-term outlook is positive for livestock feeders as feed prices are expected to decline into the second half of 2025.
