Global banks are facing new vulnerabilities as central banks consider keeping interest rates high to combat persistent inflation. A report by Charles Cohen, Srobona Mitra, and Fabio Natalucci highlights the need for enhanced analytical tools and regulatory responses to address emerging threats in the banking sector. The report introduces stress-testing tools to assess risks from rising interest rates and new surveillance tools for tracking emerging banking fragilities. Rising interest rates can result in increased loan losses and diminished value for banks' investments in bonds and debt securities. While the banking system appears resilient under a baseline scenario, the report suggests that in severe stagflation scenarios with high inflation and increased central bank rates, the number of weak institutions could surge, calling for international standards, proactive supervision, and policy measures to address these risks effectively. Banks and regulators are urged to boost resilience as interest rates may remain elevated for a longer duration than previously anticipated. Click here to read full article first published on IMF Blog.

Security concerns in Israel have disrupted crop harvesting in various regions. Recent violence in the Israeli-Palestinian territories has strained the fresh fruit and vegetable supply chains in the area. Safety worries have forced many growers in both southern and northern Israel to suspend their harvests, affecting packhouses and labour availability. Workers from the West Bank, a primary labour source, are unavailable due to the situation. Some Thai workers from southern Israeli farms have suffered casualties or trauma. While Israeli companies continue operations with reduced volumes, the situation remains volatile. The closure of the Port of Ashdod and restricted access to fields further jeopardize crop production, potentially leading to losses in various crops, including tomatoes, affecting the supply chain down the line. Click here to read full article first published on fruitnet.com.

Indonesia, traditionally a self-sufficient rice producer, is set to dramatically increase its rice imports in 2023 due to concerns about rice supplies amid El Niño weather patterns. This surge in imports is forecasted to nearly quadruple from the previous year, making Indonesia the world's third-largest rice importer. This significant shift in Indonesia's rice procurement strategy is expected to strain the already tight global rice market, as the country looks to import 2.8 million tons in 2023 and 1.4 million tons in 2024. The Indonesian government has authorized the state-owned logistics company BULOG to import rice as domestic procurement falls short and stocks tighten. The surge in import demand coincides with global exportable supplies being constrained. While India was the top supplier in 2021 and 2022, recent bans on certain rice exports have led Indonesia to turn to Vietnam and Thailand. Pakistan, previously a key supplier, faced crop shortages but anticipates a rebound in supply. Additionally, Indonesia aims to import a substantial quantity from China, potentially the largest since 1998, as China offers competitive prices in the global market. Despite government authorization for more imports, the USDA foresees Indonesia importing 2.8 million tons in 2023, highlighting the uncertainties surrounding global rice trade dynamics. Click here to read full report on Grain: World Markets and Trade by USDA.

Minister in the Presidency for Electricity, Dr. Kgosientsho Ramokgopa, stated that Africa has the potential to produce more energy than it needs in the next 30 years by harnessing its abundant natural resources. He made this declaration during a keynote address on Green Hydrogen at the Africa Energy Week in Cape Town. Africa's geographical advantages, such as high radiation levels and strong coastal winds, can enable the continent to generate up to 50 times more renewable energy than the world's projected demand by 2040. Ramokgopa emphasized the need for Africa to define its own "Just Energy Transition" that includes universal access, the utilization of critical minerals for green hydrogen development, and job creation through local smelting of African iron ore. He also discussed the potential of green hydrogen production using seawater to mitigate the strain on limited freshwater resources. Sub-Saharan Africa possesses the capacity to produce significant amounts of green hydrogen, contributing to economic growth and sustainability. Click here to read full article first published on SAnews.gov.za.

October 16th marks World Food Day, a celebration of the founding of the United Nations Food and Agriculture Organization in 1945. This day is also an opportunity for countries to reflect on their food security conditions and efforts to boost agricultural production. Thus, today, we revisit an aspect we discussed a year ago: food security conditions in South Africa. One of the measures some researchers often use to evaluate the food security condition of each country relative to the world is The Economist's Global Food Security Index. In 2022, South Africa ranked 59th out of 113 countries in the index and was the most food secure in Sub-Saharan Africa. This is an improvement from the previous year's ranking of 70th in 2021. South Africa ranked the second most food-secure country in the African continent after Morocco. The Global Food Security Index comprises four subindices, namely: food affordability, food availability, food quality and safety, and sustainability and adaptation. The affordability and availability subindices carry a combined weighting of two-thirds of the total index. Click here to read full article by Agbiz Chief Economist Wandile Sihlobo and click here to watch Newzroom Africa Interview on the State of food security in South Africa  

One critical data release in South Africa's agricultural sector this past week was tractor sales, which often tell us much about the financial conditions in the sector and prospects for the next season, when approaching planting. But, this year, I think one has to look at the sales data differently, particularly when gauging the prospects for the 2023/24 summer crop season. There are various reasons for the recent moderation in sales, which do not necessarily signal downbeat prospects for the season. First, one has to appreciate that the relatively more robust agricultural machinery sales of the first half of this year were primarily a tail-end benefit of the past season when large harvests and higher commodity prices boosted grain and oilseed farmers' finances. The delays in the delivery of the orders raised the sales figures for the first half of the year. Over the medium term, the sales will probably remain subdued, despite the current 2022/23 large grain and oilseed harvest, but somewhat above long-term average levels. Read full report by Wandile Sihlobo here. 

South Africa's consumer food inflation slightly slowed to 8,0% in September 2023 from 8,2% in the previous month. The product prices underpinning this deceleration are mainly bread and cereals; oils and fats; sugar, sweets and desserts; and vegetables. Our view of the path forward remains unchanged from what we have consistently communicated over the past few months. While there are renewed risks in global and agriculture, such as India's decision to ban specific categories of rice exports and the Black Sea Grain Deal Initiative that facilitated grains and oilseeds exports from Ukraine terminated, and domestically, the avian flu, we are still optimistic that South Africa's consumer food inflation will continue to slow throughout the year into 2024. The spreading of avian influenza has mostly affected Gauteng, Mpumalanga, Free State, Limpopo and North West. Over a hundred primarily commercial facilities have reported avian influenza cases. There are reported losses in parental stock for breeders of layers and broilers. Click here to read full article by Wandile Sihlobo.

The topical issue in South Africa's agriculture currently is the avian influenza spreading across South Africa. The most dominant strains are the highly pathogenic H5 and H7. The most affected provinces so far are Gauteng, Mpumalanga, Free State, Limpopo and North West. We understand that over a hundred mostly commercial facilities have reported avian influenza cases so far. Notably, there are reported losses in parental stock for breeders of layers and in broilers. For this reason, there are now constraints to egg supplies, as evident in various retail shelves across South Africa. Over the past week, we participated in two critical meetings addressing the immediate challenge. First, the Department of Agriculture, Land Reform and Rural Development (DALRRD) met with the retailers. The aim was to assess the severity of the egg supplies at the retail level and assess various response measures. Click here to listen to full episode on Agricultural Market Viewpoint with Wandile Sihlobo.

More grains and oilseeds in storage also mean more fumigation. With producers exempt from the legal obligations that commercial storage operators must meet. It is, therefore, important that standards are kept at an acceptable level. Grain and oilseed production has doubled since deregulation. Fumigation is a focal point that will be addressed in the first quarter of 2024. It is very important that the commercial storage sector and producers who store grain for more than their own use keep a close eye on fumigation requirements and that fumigation standards are maintained at an acceptable level. It is extremely important that affordable fumigants are available in South Africa and that those involved comply with the legal requirements. Therefore, Agbiz Grain focuses on fumigation and expects the issue to receive more attention from importers, suppliers, and storage operators in 2023-24. Click here to read full article by Agbiz Grain General Manager Wessel Lemmer first published on Landbouweekblad.

Growing U.S. demand for soybean oil, driven by low-carbon fuel mandates, is set to continue in 2023/24, causing a decline in soybean oil exports and pushing the United States out of the global soybean oil export market. U.S. production of renewable diesel has significantly expanded in recent years, leading to a shift in vegetable oil imports due to higher biomass-based diesel demand domestically. The United States, once a major global supplier of soybean oil, saw a significant drop in exports in 2022/23, falling to just 0.2 million tons, turning the country into a net importer of soybean oil for the first time in history. This shift is attributed to changes in biofuel policies and higher multiyear biofuel blending targets set by the U.S. Environmental Protection Agency. In response to these policy changes, imports of other feedstocks such as canola oil, tallow, and used cooking oil have surged. Canola oil imports, especially from Canada, have increased significantly, while China has shifted to rapeseed oil imports from Russia and Belarus. U.S. rapeseed oil imports are projected to reach a new record of 3.0 million tons in 2023/24. Additionally, higher domestic vegetable oil prices and a strong U.S. dollar have driven imports of used cooking oil to meet biofuel demand, with a substantial volume imported from China. These changes reflect the ongoing impact of low-carbon fuel policies on the U.S. vegetable oil trade balance. Click here to read full report on Oilseeds: World Markets and Trade by USDA.

Transnet's proposal to develop a multi-purpose terminal for handling citrus and other fruits at Durban's Maydon Wharf Port has received positive feedback from the Citrus Growers Association (CGA). Delays and congestion at Durban Port have been impacting South Africa's fruit export capabilities, reducing profitability for farmers. The Maydon Wharf area offers substantial infrastructure with 15 common-user berths and an annual cargo capacity of over 7 million tons. The Transnet tender for this project will extend for 25 years, and interested parties have until January 2024 to submit their proposals. South Africa, the second-largest citrus exporter globally, mainly to the European Union, faces challenges related to cold treatment processes and pre-cooling requirements for citrus exports. The CGA welcomes Transnet's initiative, emphasizing its potential to significantly boost the industry, create jobs, and enhance economic growth. Click here to read full article first published on Independent Online (IOL).

European apple and pear forecasts for the 2023/24 season are significantly downgraded due to climate warming. The World Apple and Pear Association (Wapa) cites "regional adjustments" made in response to various extreme weather events. EU apple production is expected to drop below 11 million tonnes, a 4% decrease from the original forecast. Pear estimates in Italy, Spain, Belgium, and the Netherlands have been lowered by 6%, resulting in a forecast of around 1.72 million tonnes. These revisions come after initial forecasts at Prognosfruit in August predicted a 3.3% decrease in EU apple production and a 12.9% decrease in pear production. The climate's increasing volatility, marked by droughts, floods, hail, warm temperatures, and disease risks, has led to these adjustments, emphasizing the impact of climate change on European fruit production. Click here to read full article first published on fruitnet.com.

The hotel, restaurant, and institutional (HRI) sector in South Africa is showing signs of recovery from the impact of the COVID-19 pandemic. In 2022, the South African food service industry generated more than US$4.3 billion in revenue, marking a substantial increase of over 20% compared to the previous year. However, this revival is not without hurdles, as the industry grapples with persistent challenges such as frequent power outages, known as load shedding, and soaring food price inflation. A noteworthy trend in the South African HRI sector is the growing preference for convenience foods, fast-service restaurants, and takeaways. Additionally, there is a noticeable shift towards providing healthier dining options. South Africa's fast-food industry is highly developed and characterized by prominent domestic and international brands, bolstered by robust franchising models and a well-established network of industry associations. With these developments in mind, there are ample opportunities for American exports to make their mark in the South African HRI sector. Click here to read full USDA’s report on South Africa’s food service - hotel restaurant institutional. 

After experiencing a relatively dry start to the month, substantial rainfall is expected across large parts of the interior regions in the upcoming days. Favourable atmospheric circulation patterns, including several upper-air systems, are set to bring early summer rainfall events. Initially, widespread rainfall will drench the southern half of the interior, though the responsible low-pressure system will move eastward, leading to drier but cooler conditions for the country. Another upper-air low is forecasted to develop in the southwest and move northeast, likely bringing widespread thundershowers in the northeastern parts by next week. The eastern parts of the country will experience mild to cool conditions, southeasterly to easterly winds, and rain along the southeastern to eastern seaboard due to a low-pressure system to the east. While the pattern may not result in widespread above-normal rainfall, scattered thundershowers remain possible in the northeast, adding some moisture to the atmosphere. Click here to read full report by by J Malherbe and R Kuschke. 

Global Trade Advisors invite you to take part in the Trade & Industrial Policy Survey, designed to gauge public perceptions of South Africa's evolving trade and industrial policies. With policies in this domain changing rapidly, the aim is to grasp which of these policies are seen as contributing to economic growth. While this survey is not data-supported, your input is vital in providing valuable insights. In light of the growing emphasis on industrial policies, we believe it's an excellent opportunity to test the waters and gather diverse perspectives. The survey will remain open until October 25th, and for us to generate meaningful results, we need a substantial number of responses. Your input can make a significant impact, and we'll share the findings once the survey is complete. Please consider sharing this survey with your members to ensure a comprehensive and representative response base. Click here to take survey.

This update provides a comprehensive overview of the South African supply chain's current state and international trade. South African commercial ports faced operational challenges, leading to a decrease in container handling compared to the previous week. Ports of Cape Town and Durban experienced significant congestion issues. Infrastructure upgrades and operational delays occurred during the week. Globally, the IMF predicts a slow and uneven recovery from COVID-19 and geopolitical tensions, impacting economic growth. Despite a global trade recovery, container shipping lines struggle to match capacity with consumer spending. Notable changes in regulations and capacity projections are discussed. International air cargo to and from South Africa saw a substantial increase. Regional cross-border road freight trade faced increased queue and transit times. The port economy faces ongoing challenges, emphasizing the need for improvement in trade and logistics. All stakeholders share responsibility for this transformation. Click here to read full BUSA Cargo movement update 158.

The Citrus Growers' Association of Southern Africa (CGA), shares the latest news in the citrus industry in its weekly update, From the desk of the CEO. Please click here to peruse. 

• Agbiz is the only organisation that serves the broader and common over-arching business interests of agribusinesses in South Africa.
• Agbiz addresses the legislative and policy environment on the many fronts that it impacts on the agribusiness environment.
• Agbiz facilitates considerable top-level networking opportunities so that South African agribusinesses can play an active and creative role within the local and international organised business environment.
• Agbiz research provides sector-specific information for informed decision-making.
• Agbiz newsletter publishes members' press releases and member product announcements.