South Africa's food and non-alcoholic beverages price inflation remain unchanged for a third consecutive month, at 3.4% y/y in July 2018. Similar to the previous months, most food products inflation within the basket generally softened due to lower agricultural commodity prices, which in turn, were a reflection of available large supplies. The deceleration in meat price inflation was largely underpinned by lower pork prices. The only food category that showed a notable uptick was milk, eggs and cheese, which was partly due to the effects of avian influenza in South Africa's egg-laying flock.  Agbiz head of Agribusiness Research, Wandile Sihlobo, provides  more insight.

Following a notable increase in fuel prices over the past few months, September 2018 could bring a further uptick to an all-time high. It is still too early to be certain about the scale, but the current estimates suggest that prices of petrol and diesel could rise by a percentage point, respectively, from August 2018 levels. While this fuel price increase is set to come during a relatively quiet period in the agricultural sector, farmers in the eastern parts of the country will be at the initial stages of soil preparations for the 2018/19 production season which commences around mid-October 2018. The agribusinesses that operate in the transport industry will also feel a bit of pressure on input costs due to their exposure to road transport. Roughly 81% of maize, 76% of wheat and 69% of soybeans in South Africa are transported by road. On average, 75% of national grain and oilseed are transported by road. Wandile Sihlobo, provides  more insight.

In previous reports, we've mentioned a possibility of an El Niño event towards the end of this year, heading into 2019. This was according to estimates from the International Research Institute for Climate Society at Columbia University and the South African Weather Service.
While in some countries in the northern hemisphere this weather phenomenon typically leads to flooding, for South Africa it usually leads to droughts. This could negatively affect the agricultural sector, as evidenced in the 2015/16 drought periods.  Click here for Wandile Sihlobo's full article.