Agriculture
La Niña predictions playing into futures pricing─── SABRINA DEAN 18:41 Tue, 19 Jul 2016
Bloemfontein - An agricultural economist says futures markets are already reacting to weather forecasts predicting more favourable rainfall conditions in the new season.
FNB senior agricultural economist Paul Makube says this is already having a moderating effect on food inflation.
He says if forecasts remain on course and the El Niño pattern transitions into a La Niña, there is a probability of above normal rainfall early in summer. This could in turn result in a good 2016/17 crop season.
"You know we will be starting to plant from October onwards and therefore the only impact we should expect is mid 2017 when we harvest the crop and know the extent of the harvest.
"Futures prices are already pricing in that expectation of an improvement in production conditions so they have already started moderating - which is good for inflation going forward."
Makube says good rains would also ease pressures on struggling livestock producers as grazing would recover.
OFM News
La Nina predictions playing into futures pricing:
