Page 17 - 19 Cotton SA September 2019
P. 17

/ INDUSTRY


           The policy uncertainty created by the   prices for exporting industries. Unfortunately, a
        confusing statements about the future of the   weaker rand also results in higher prices for
        Reserve Bank combined with the global policy   import-based farm requisites. Higher summer
        uncertainty, mainly driven by Trump vs China   grain prices caused by the lower US plantings
        and Brexit, have already resulted in a flight   and the weaker rand will affect the price of
        away from South Africa. On 7 June, foreigners   cotton by-products positively. Chances are
        sold an all-time record R9,6 billion worth of   that interest rates will remain at current levels
        government bonds. In the current year capital   or decrease slightly in coming months. Global
        inflow for government bonds and to the JSE   and local economic conditions are uncertain.
        are still positive. However, the combination of   Now is not the time to take big financial risks.
        international and local uncertainty can result in   Farmers should compile capital budgets with
        a further serious outflow of capital.      conservative income projections.
        IMPLICATIONS FOR
        AGRICULTURE
        Weak retail demand will affect food prices
        negatively. Lower global economic demand may
        affect export demand. However, demand in the
        huge Chinese and Indian markets will continue
        to grow, driven by the new emerging middle            Farmers should
        class. The weaker rand will result in higher
                                                       compile capital budgets
                                                      with conservative income
                                                             projections.”







































                                                    Volume 21 No 3 September 2019  |  17
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