Foot and mouth disease keeps beef prices uncertain despite crop gains

The volatility in beef prices over the past few months is largely impacted by the outbreak of foot and mouth disease (FMD).

However, senior agricultural economist at FNB Commercial, Paul Makube, believes the FMD-induced supply crunch has dissipated somewhat owing to the combination of an export ban that increased local availability and improved slaughter rates.

Outlook for food inflation in 2025/26

“With better seasonal production conditions forecast for the 2025/26 crop season, coupled with a resurgent rand exchange rate, we can expect further downside surprises in food inflation outcomes in the medium term,” said Makube.

• Food inflation accelerated to an 18-month high of 5.5% year-on-year in July before slowing to 5.2% in August.

• The slowdown was underpinned by modest declines in cereal products, fruit and nuts, vegetables, milk, dairy products and eggs.

• Month-on-month, food inflation fell by 0.8%, led by cereals and vegetables, including a slowdown in the meat category.

Cereal inflation eases as harvest estimates rise

“After a 2025 peak of 4.8% year-on-year in April, cereal products’ inflation extended its downtrend for the fourth consecutive month to 1.5% year-on-year in August as strong seasonal harvests weighed heavily on raw commodity prices.

• The 2024/25 commercial summer crop harvest estimate was revised upward by 4.3% to 19.55 million tonnes, a 25.9% increase from last year.

• This is just 2.6% below the record high of 20.07 million tonnes in the 2022/23 season.

“At the same time, the stronger rand continued to pose downside risk on grain and oilseed prices. Consequently, maize prices fell by 17% (white maize) and 3% (yellow maize) year-on-year, to an average of R4.433 per tonne and R3.931 per tonne respectively in August 2024,” Makube said.

Meat inflation remains key pressure point

Although posting a modest monthly deceleration of 0.4% in August from 3.3% in July, meat inflation remained the biggest drag on overall food inflation, quickening to a 30-month high of 11.3% year-on-year.

• Earlier restrictions on chicken imports from Brazil were lifted, but volumes have not recovered.

• Poultry imports in July were down by 34.9% month-on-month and 70.9% year-on-year at 10 543 tons.

• Year-to-July poultry imports were down 30.2% year-on-year at 176 703 tons.

Ongoing FMD outbreaks create uncertainty

“The intermittent FMD outbreaks remain a huge uncertainty in the market due to their interruptions to the slaughter pattern and the subsequent price volatility,” Makube concluded.

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