BEEF MUTTON MONTHLY REPORT FEBRUARY

1 Enquiries: Dr Johann van der MerweCell: 073 140 2698 Web: mail: AMT (Pty) Ltd beef & MUTTON MONTHLY REPORT FEBRUARY 2017 Compiled byPieter Cornelius E mail: NEXT PUBLICATION 7 MARCH 2017 ALL RIGHTS RESERVED Clients only not for distribution No part of this publication may be reproduced or transmitted in any form or by any means including recording or by any information storage and retrieval system, without permission in writing from AMT. Although everything has been done to ensure the accuracy of this information, AMT does not take responsibility for the accuracy or the opinions contained in this publication. Results of actions based on this information, will not be the responsibility of AMT. AMT (Pty) Ltd 1 AMT MONTHLY beef AND MUTTON REPORT FEBRUARY BOTTOM LINE beef In January 2017 year on year, the average producer prices of Class A2/A3, Class B2/B3 and Class C2/C3 beef increased in total by respectively 10,2%, 20,0% and 23,4%.

2 For FEBRUARY 2017 , a decline is predicted in the average price of Class A2/A3, and based on the price information of the past 18 years, the probability is 57,9% that the average price of the A2/A3 s is going to be lower compared to the previous month. For FEBRUARY 2017 , an increase is predicted in the average price of weaners, and based on the price information of the past 20 years, the probability is 55,0% that the average price of weaners is going to be higher in FEBRUARY compared to the previous month. The average yellow maize price (all contracts on JSE SAFEX) was 15,9% lower in January 2017 year on year. Over the same period the average price of medium light weaners increased in total by 33,4% in January. In January 2017 year on year, the import parity price of Australian cow meat was 6,2% lower compared to an increase of 23,4% in the average price of Class C2/C3 beef . In January 2017 , the number of beef cattle slaughtered was in total 28,3% less compared to the previous month, 5,6% less than in January 2016 and 14,4% below the long term average over the period January 2014 to January 2017 .

3 In November 2016, South Africa imported 1 583 tons of beef from Namibia (including live animals), which was 66,9% less than in the same month in 2015. In November 2016, South Africa imported 310 tons of beef from Botswana, which was 28,1% less than the same month a year ago. In November 2016, a total of 111 tons of beef (excluding offal) was imported from overseas, which was 105,6% less than the same month in 2015. MUTTON In January 2017 the number of MUTTON and lamb slaughtered was 28,7% less compared to the previous month, 5,3% less compared to January 2016, and 23,7% down compared to the long term average over the period January 2014 to January 2017 . The average producer prices of Class A2/A3, B2/B3 and C2/C3 increased in total by 20,8%, 21,7% and 24,0% in January 2017 year on year, the and the average price of all classes was 24,3% higher than the average over the period January 2014 to January 2017 . For FEBRUARY 2017 , a decline is predicted in the average price of Class A2/A3, and based on the price information of the past 20 years and the probability is 65,0% that the average price of the A2/A3 s is going to be lower in FEBRUARY compared to the previous month.

4 In January 2017 year on year, the import parity price of Australian lamb declined in total by 2,9% and the average price of AU MUTTON increased by 16,3%. In November 2016, South Africa imported 1 583 tons of MUTTON and lamb from Namibia (including live sheep), which was 172,0% more than in the same month in 2015. In November 2016, a total of 211 tons of MUTTON was imported from overseas, which was 60,0% less than the same month in 2015. AMT (Pty) Ltd 2 PRODUCTION INFORMATION FOR THE MONTH OF JANUARY 2017 Item Jan2017 Previousmonth Jan2016 ForecastFeb 2017 Mar2017 beef Abattoir selling prices (c/kg) A2/A3 s 3886386635273 832 3976AB2/AB3 s 3746383732853 680 3782B2/B3 s 3596367929983 489 3568C2/C3 s 3478353828183 370 3305 Net weaner price (c/kg)2340218317542 337 2272 Slaughtering index ( ) 85,6119,490,7 Import parity AU cows (c/kg) 663566417072 MUTTON Abattoir selling prices (c/kg) A2/A3 s 6785658256186 648 6347AB2/AB3 s 5934584549055 829 5532B2/B3 s 5349539843935 157 4899C2/C3 s 5103510241144 920 4576 Slaughtering ( ) 63,989,567,5 Import parity AU MUTTON (c/kg) 500149304299 Import parity AU lamb (c/kg)

5 7 620 7 431 7 842 beef INDUSTRY Slaughtering of beef cattle Aggregate slaughter Information received from of Red Meat levy Admin only available till November 2016 with preliminary slaughter based on information from the Red Meat Abattoir Association for December and January 2017 . For the month of December and January we have to rely on the percentage change in the total slaughter against the previous month of the approximately 20 abattoirs which provide the information for the price analysis. The slaughter index in the graph is based on the total slaughter of Red Meat levy Admin in South Africa, and gives a good indication of what is happening on the production side. The horizontal 100 line on the graph represents the long term average MONTHLY slaughter of beef cattle from January 2014 to January 2017 . 70 80 90 100 110 120 130 140 150 160 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 IndexINDEX OF MONTHLY SLAUGHTERED OF CATTLEC attle slaughteredBase year Average Jan 2014 Jan 2017 =100 AMT (Pty) Ltd 3 80 90 100 110 120 130 140 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 IndexCLASS A2/A3 beef PRICE VERSUS SLAUGHTER Class A2/A3 RSA SlaughterBase month Jan 2016 = 100 In January 2017 , the slaughter of beef cattle seems to decline in total by 28,3% compared to the previous month, 5,6% less than the same month a year ago, and 14,4% below the long term average based on the period January 2014 to January 2017 .

6 The slaughter curve shows a downward trend from March 2016 to January 2017 . Price movements of beef Long term trends in beef prices In January 2017 year on year, the average producer prices of Class A2/A3, Class B2/B3 and Class C2/C3 beef increased in total by 10,2% 20,0% and 23,4%. The average price of the A2/A3 s was 10,7% above the long term average over the period January 2014 to January 2017 . Price of Class A2/A3 beef versus slaughter From January 2016 to January 2017 , the average producer price of Class A2/A3 beef increased in total by 10,2% and over the same period national slaughter declined in total by 5,6%. LONG TERM TREND IN THE PRODUCER PRICE OF BEEF22002500280031003400370040004300 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17c/KgClass A2/A3 Class B2/B3 Class C2/C3 AMT (Pty) Ltd 4 Price prediction for Class A2/A3 beef PREDICTION OF beef PRICES (A2/A3) FOR FEBRUARY TO JULY 2017 30003200340036003800400042004400 JanFebMarAprMayJunJulAugSepOctNovDecc/kg Class A2/A3 (2016)3-year average pricesClass A2/A3 ( 2017 ) FEBRUARY to July 2017 20 17 In January 2017 , compared to the previous month the average price of Class A2/A3 beef increased in total by 0,5%.

7 For January an increase in the average price for Class A2/A3 beef was predicted. For FEBRUARY 2017 a decline is predicted in the average price of the A2/A3 s and according to the price information over the past 19 years, the probability is 57,9% for a lower in price from January to FEBRUARY each year. Due to the drought in 2016, producers were forced to liquidate their beef herds, which are having a negative effect on the supply of beef to the market. The JSE futures price for March is 4100c/kg which 3,1% higher compared to the predicted price for Class A2/A3 beef carcasses in March. It is therefore possible that the average price in FEBRUARY will increase and not decline as predicted. Price prediction for Class B2/B3 beef PREDICTION OF beef PRICES (B2/B3) FOR FEBRUARY TO JULY 2017 240026002800300032003400360038004000 JanFebMarAprMayJunJulAugSepOctNovDecc/kg Class B2/B3 (2016)3-year average pricesClass B2/B3 ( 2017 )Prediction FEBRUARY to July 2017 2017 AMT (Pty) Ltd 5 1600175019002050220023502500 JanFebMarAprMayJunJulAugSepOctNovDecc/kg WEANER CALF PRICE TRENDS Weaner price 20163-year averageWeaner prices ( 2017 )Prediction FEBRUARY to July 2017 ?

8 2017 In January 2017 , compared to the previous month the average price of Class B2/B3 beef declined in total by 2,3%. For January an increase in the average price for Class B2/B3 beef was predicted which was incorrect and was based on a probability of 72,2% for an increase according to the price information over the past 18 years. This prediction does not take into account the severe drought of 2016 which is causing a decline in supply Due to the drought in 2016, producers were forced to liquidate their beef herds, which are having a negative effect on the supply of beef to the market. In January year on year slaughter of B2/B3 cattle declined in total by 31,5%. For FEBRUARY 2017 a decline is predicted in the average price of the B2/B3 s, and according to the price information over the past 18 years the probability is 68,4% for a decline in price from January to FEBRUARY each year. Taking into account the decline in slaughter, the average price can be expected to increase in FEBRUARY .

9 Although not being shown in the above graph, the average producer price of Class C2/C3 is expected to decline in FEBRUARY , but may also increase. MONTHLY AVERAGE ABATTOIR SELLING PRICES OF beef CARCASSES EXCLUDING MONTHLY prices (c/kg) Aug 2016 Sep2016 Oct2016 Nov2016 Dec 2016 Jan 2017 Class A2/A3 3 809 3784374536903866 3 886 Class AB2/AB3 3 654 3 6713 6433 6353 837 3 746 Class B2/B3 3 367 3 4293 3543 3953 679 3 596 Class C2/C3 3 146 3 2653 3213 3333 538 3 478 Medium Light weaners1 949 1 9561 9982 0822183 2 340 Weaner (190 240kg) price movements The net price (farm gate price) of medium light weaners (190 240kg) increased in total by 7,2% in January 2017 compared to the previous month and increased in total by 33,4% year on year. The prediction of an increase in the average price of weaners for January 2017 was based on a probability of 73,7% over 19 years to be higher in January compared to the previous month. For FEBRUARY , an increase is predicted in the average price of weaners, and based on the price information over the past 20 years, the probability is 55,0% for the average weaner price to be higher in FEBRUARY compared to the previous month.

10 The predicted increase is being supported by the following supply factors. AMT (Pty) Ltd 6 140017002000230026001 4001 9002 4002 9003 4003 900 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Weaner price & break-even c/kgYellow maize R/tonBREAK-EVEN PRICES OF WEANERS AND YELLOW MAIZE PRICE TRENDSW eaner break-even priceYellow maizeLight weanersPrediction A big lost occurred in the female herd over the past year due to the drought, which resulted in less weaners available for the 2017 marketing year. Due to good rains that fell over most of the beef producing areas, producers will start rebuilding their herds, which will reduce the number of weaner heifers available for the feedlot industry. beef producers will tend to operate as buyers at auctions to rebuild their herd due to excessive grazing on their farms and by doing so will increase the demand for weaners. The maize/weaner break even price The average yellow maize price in January 2017 was in total 0,6% lower compared to the previous month, and 15,9% lower compared to the same month a year ago.