THE DAY AFTER COVID-19

HOW TO GET GOING AGAIN ON DAY ZERO

WHAT IS HAPPENING IN VALUE CHAINS AND MARKETS?

We are still trying to come to grips with just how we are going to deal with the here and the now, since the start of the pandemic. Many questions are being asked about the future, in particular, ‘How will we get going again?’ and ‘What will life after COVID-19 look like?’

We do not have the answers yet, but we need to start thinking about how to position ourselves and our businesses for Day Zero – the day when things are supposed to return to ‘normal’ again. Here are some observations on what is happening in markets and value chains at the moment.

FRESH PRODUCE

ALTHOUGH FRESH PRODUCE MARKETS EXPERIENCED A LULL FROM THE 27TH TO THE 30TH OF MARCH 2020, IT STARTED PICKING UP AGAIN ON THE 31ST  OF MARCH 2020.

THE FEET ARE BACK.

However, the feet are different to some degree. Market agents are registering new clients by the minute. Why? Many shops are forced to go directly to market to buy products due to the permit system that is in place.  Hence, fresh produce value chains are suddenly shorter in some cases.

Regulations changed to allow informal traders to travel to fresh produce markets to source their produce for spaza shops. This should bring some normality back to fresh produce markets, depending on purchasing power via the informal trade.

GRAINS AND OILSEEDS

The US planting intentions were published earlier in the week. In Summary: Much more corn to be planted (8% up from 2019), much more soybeans (10% up from 2019) and a little bit less wheat (1% down from 2019). Apparently, it will be the lowest wheat acres since records began in 1919. 

INTERESTINGLY, STOCKS ON
ALL THESE CROPS ARE
MUCH LOWER COMPARED
TO 1 MARCH 2019. CORN
STOCKS ARE DOWN BY 8%,
SOYBEAN BY 17% AND
WHEAT BY 11%

IMPLICATIONS:
With the combined impact of lower crude oil prices and COVID-19, US corn and soybean prices (and other vegetable oil types)
could drop quite a bit. However, a weaker exchange rate against the US Dollar will soften the local price impact.  We are in for a rough ride on grain and oilseed prices driven by exchange rate and international prices.

LIVESTOCK

Indications are that feedlots are
standing back for the moment,
not sure whether to buy weaners
or to sit it out and see
what happens to demand
and spending power.

HEAVIER ANIMALS AND
C-GRADE CATTLE PRICES SEEM TO REMAIN FIRM FOR NOW AND VALUE CHAINS APPEAR TO OPERATE.  IT SEEMS AS IF THE BEEF VALUE CHAIN HAS SHORTENED A BIT WITH  FEEDLOTS STANDING BACK.

NOT SURE IF THIS WILL REMAIN THE CASE.

In terms of intensive livestock types, pork value chains seem to operate, whilst chicken meat value chains changed due to the closure of
take-away outlets. Producers are therefore having to find other routes to market for now.  We do not think this will persist and things should normalise once take-away outlets can operate again.

HOWEVER, PLENTY WILL DEPEND ON SPENDING POWER AFTER COVID-19.

FRESH PRODUCE

ALTHOUGH FRESH PRODUCE MARKETS EXPERIENCED A LULL FROM THE 27TH TO THE 30TH OF MARCH 2020, IT STARTED PICKING UP AGAIN ON THE 31ST OF MARCH 2020.

THE FEET ARE BACK.

However, the feet are different to some degree. Market agents are registering new clients by the minute. Why? Many shops are forced to go directly to market to buy products due to the permit system that is in place.  Hence, fresh produce value chains are suddenly shorter in some cases.

Regulations changed to allow informal traders to travel to fresh produce markets to source their produce for spaza shops. This should bring some normality back to fresh produce markets, depending on purchasing power via the informal trade.

GRAINS AND OILSEEDS

The US planting intentions were published earlier in the week. In Summary: Much more corn to be planted (8% up from 2019), much more soybeans (10% up from 2019) and a little bit less wheat (1% down from 2019). Apparently, it will be the lowest wheat acres since records began in 1919. 

INTERESTINGLY, STOCKS ON ALL THESE CROPS ARE MUCH LOWER COMPARED TO 1 MARCH 2019. CORN STOCKS ARE DOWN BY 8%, SOYBEAN BY 17% AND WHEAT BY 11%

IMPLICATIONS:
With the combined impact of lower crude oil prices and COVID-19, US corn and soybean prices (and other vegetable oil types)
could drop quite a bit. However, a weaker exchange rate against the US Dollar will soften the local price impact.  We are in for a rough ride on grain and oilseed prices driven by exchange rate and international prices.

LIVESTOCK

Indications are that feedlots are standing back for the moment, not sure whether to buy weaners or to sit it out and see what happens to demand and spending power.

HEAVIER ANIMALS AND C-GRADE CATTLE PRICES SEEM TO REMAIN FIRM FOR NOW AND VALUE CHAINS APPEAR TO OPERATE.  IT  SEEMS AS IF THE BEEF VALUE CHAIN HAS SHORTENED A BIT WITH  FEEDLOTS STANDING BACK.

NOT SURE IF THIS WILL  REMAIN THE CASE.

In terms of intensive livestock types, pork value chains seem to operate, whilst chicken meat value chains changed due to the closure of take-away outlets. Producers are therefore having to find other routes to market for now.  We do not think this will persist and things should normalise once take-away outlets can operate again.

HOWEVER, PLENTY WILL DEPEND ON SPENDING POWER AFTER COVID-19.

FRESH PRODUCE

ALTHOUGH FRESH PRODUCE MARKETS EXPERIENCED A LULL FROM THE 27TH TO THE 30TH OF MARCH 2020, IT STARTED PICKING UP AGAIN ON THE 31ST OF MARCH 2020.

THE FEET ARE BACK.

However, the feet are different to some degree. Market agents are registering new clients by the minute. Why? Many shops are forced to go directly to market to buy products due to the permit system that is in place.  Hence, fresh produce value chains are suddenly shorter in some cases.

Regulations changed to allow informal traders to travel to fresh produce markets to source their produce for spaza shops. This should bring some normality back to fresh produce markets, depending on purchasing power via the informal trade.

GRAINS AND OILSEEDS

The US planting intentions were published earlier in the week. In Summary: Much more corn to be planted (8% up from 2019), much more soybeans (10% up from 2019) and a little bit less wheat (1% down from 2019). Apparently, it will be the lowest wheat acres since records began in 1919. 

INTERESTINGLY, STOCKS ON ALL THESE CROPS ARE MUCH LOWER COMPARED TO 1 MARCH 2019. CORN STOCKS ARE DOWN BY 8%, SOYBEAN BY 17% AND WHEAT BY 11%

IMPLICATIONS:
With the combined impact of lower crude oil prices and COVID-19, US corn and soybean prices (and other vegetable oil types) 
could drop quite a bit. However, a weaker exchange rate against the US Dollar will soften the local price impact.  We are in for a rough ride on grain and oilseed prices driven by exchange rate and international prices.

LIVESTOCK

Indications are that feedlots are standing back for the moment, not sure whether to buy weaners or to sit it out and see what happens to demand and spending power.

HEAVIER ANIMALS AND C-GRADE CATTLE PRICES SEEM TO REMAIN FIRM FOR NOW AND VALUE CHAINS APPEAR TO OPERATE.  IT  SEEMS AS IF THE BEEF VALUE CHAIN HAS SHORTENED A BIT WITH  FEEDLOTS STANDING BACK.

NOT SURE IF THIS WILL  REMAIN THE CASE.

In terms of intensive livestock types, pork value chains seem to operate, whilst chicken meat value chains changed due to the closure of take-away outlets. Producers are therefore having to find other routes to market for now.  We do not think this will persist and things should normalise once take-away outlets can operate again.

HOWEVER, PLENTY WILL DEPEND ON SPENDING POWER AFTER COVID-19.