Grain SA: Producer input costs rising on weak rand

18 Sep 2015

The weak rand is contributing to raising the input costs of local producers, which may affect output, Grain SA economist Wandile Sihlobo says.

LoveToTakePhotos via pixabay

The weakening rand was affecting producers' input costs, in particular those who had already started soil preparations, Sihlobo said on Thursday.

His organisation estimates that fuel and fertiliser respectively accounted for approximately 11% and 35% of the total variable cost of grain production.

Petrol prices are likely to remain unchanged next month, while diesel is forecast to rise by about 50c per litre, according to current estimates from the central energy fund.

SA imports more than 75% of its annual fertiliser consumption, another area that will hurt the pockets of producers given a weak rand.

The rand, which has weakened significantly in recent weeks on global developments, has firmed slightly on expectations that the US Federal Reserve could leave interest rates unchanged today.

Oil prices were "generally under pressure" due to large global supplies and expectations for Iran to add significant supplies in the world market early next year, Sihlobo said.

Source: BDpro

Source: I-Net Bridge

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