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"Although it is still some way to month-end, this points to record fuel prices in November if the recent upswing in international crude oil prices is sustained beyond recent levels of US$85/barrel, as supplies are tightening in the lead-up to the northern hemisphere's winter and the demand shifts from the expensive energy sources to oil and diesel. Another factor has been the rand weakness which depreciated by 4.7% and averaged R14.95/US dollar for the first half of October, relative to the same period in September 2021," says Makube.

"Following a sharp increase in input costs - mainly for fertiliser, pesticides, and herbicides - farmers face more input cost pressures from higher fuel prices, especially in this early stage of the summer crop season and closer to the tail end of the winter crop season," mentions Makube. 

He adds that increased activity in terms of planting, transportation of production inputs, distribution of produce - as in the case of horticulture and livestock - as well as harvesting, will attract additional costs which overall has the potential to trim the farmers' profit outlook for the year ahead, despite the current strength in commodity prices. 

"Further, this is likely to dampen the food inflation outlook, which has been sticky on the upside recently with the uptick of 7.4% y/y in August from 7% y/y in July 2021," adds Makube.

According to him, the September update is due for release on 20 October and any further increase in overall inflation has negative implications for interest rates which might be hiked sooner than expected.

OFM News/Lee Simmons