The NWK Limited external factors report provides an overview of the main external factors that NWK and its clients are exposed to at a specific point in time. This report opts to aid in a timely basis to foresee external market and other factors that may have an impact on any business and clients. The main focus of this document is to have a closer look at external factors that can affect any business and our customers.

Executive summary

External factors that can affect any business and its customers include various economic factors. This report will focus on monthly or quarterly changes of these economic factors.

The inflation rate eased to 4,3% in July 2026. Retail trade growth rose by 1,6% in June 2026. The unemployment rate rose further to 33,6% in Q2 of 2026. The GDP growth for the first quarter of 2026 grew with 0,5%, following a 0,4% growth in the previous period. The Policy Uncertainty Index rose to 81,9 in Q2 2026 (baseline 50) compared to 77,8 in Q1 2026.

External factor that are of great concern to any agricultural business are the weather and climate outlooks. These factors include long term climate risks, such as drought and heat stress, as well as the current status of the El Niño and La Niña climate phenomenon. The El Niño Southern Oscillation (ENSO) is currently on El Niño advisory. El Niño conditions is firmly established.

The July 2026 National Agricultural Marketing Council (NAMC) report estimates the projected closing stock level on 30 April 2027 for white and yellow maize to be more than that of the 2025/2026 marketing season.

The projected sunflower ending stock for February 2027 is 76 821 t, that is more than the final for the 2025/2026 season of 49 266 t. The projected soya ending stock for February 2027 is 549 835 t, which is more than the final for the 2025/2026 season of 286 120 t.

During the previous Monetary Policy Committee (MPC) meeting held on 23 July the committee decided that interest rates will remain the same. The repo rate is currently 7% and the prime rate 10,50%.

Business climate – key risk drivers

A few highlights regarding certain risk drivers are mentioned below.

According to Trading Economics, South Africa’s annual inflation rate eased to 4,3% in July 2026 from a two-year high of 5% in the prior month. The inflation rate is expected to be 4,9% by the end of this quarter. In the long-term, the South Africa inflation rate is projected to trend around 3,4% in 2027 and 3% in 2028.

Brent crude oil monthly average prices decreased by $3,29 per barrel. Iron ore decreased slightly by $2,64 per metric ton on a monthly average.

South Africa’s retail trade rose by 1,6% year-on-year in June 2026, slowing from a downwardly revised 2,2% increase in May and missing market expectations of a 2,3% advance. According to Statistics SA, South Africa’s unemployment rate rose to 33,6% in Q2 2026.

The GDP growth rate expanded by 0,5% in the first quarter of 2026. Nine of the ten industries experienced an increase.

The Safex maize prices followed the global trend, increasing modestly by 3,3% month-on-month for white maize and 2,8% for yellow maize. Annual declines in prices show that overall maize price remain under notable pressure.

The El Niño Southern Oscillation (ENSO) is on El Niño advisory. El Niño conditions are strengthening across the tropical Pacific, with SST anomalies in the Niño 3.4 region showing a steady upward trend. A strong El Niño event is likely to develop and remain in place through late 2026, with potentially severe climate impacts extending into 2027.

The Policy Uncertainty Index (PUI) rose to 81,9 (baseline 50) compared to 77,8 in Q1 2026. The elevated PUI in the second quarter of 2026 reflected a sharp increase in economic uncertainty, mainly driven by the current Middle East global energy crisis.

Sources: https://tradingeconomics.com/south-africa/inflation-cpi
https://tradingeconomics.com/commodity/brent-crude-oil
https://tradingeconomics.com/south-africa/unemployment-rate
https://www.statssa.gov.za/?page_id=737&id=1
https://tradingeconomics.com/south-africa/gdp-growth
https://agrink.co.za/downloads/ABSA%20Agri%20Trends%20Grains%20and%20Veggies.pdf
https://tradingeconomics.com/commodity/iron-ore
PUI_2026Q2.pdf

 

Agribusiness Confidence Index (ACI) Q2, 2026

The Agricultural Business Chamber (Agbiz) conducts a quarterly survey to compile the Agribusiness Confidence Index (ACI), reflecting the views of at least 25 decision-makers in the agricultural sector.

Following an 18-point decline in Q1 2026, the Agbiz/IDC Agribusiness Confidence Index (ACI) fell further by 4 points to 45 in Q2, its lowest level since Q2 2024. The factors underpinning the subdued sentiment were broad.

Survey respondents cited the impact of the Middle East conflict on energy and fertiliser prices as a major concern (the Q2 survey was conducted before the announcement of the US-Iran agreement). The lingering impact of foot-and-mouth disease, which continues to impose immense financial pressure on the cattle industry, remains a major challenge despite accelerated vaccine imports.

Moreover, lower global prices in the sugar and wheat industries are among the key constraints that some respondents highlighted as major risks weighing on sentiment, as is the slow domestic import tariff response, which should ordinarily have provided some level of cushion. Meanwhile, reports that El Niño weather conditions may characterise the 2026/2027 production season have added to concerns about the outlook.

The current ACI level of 45 is below the 50-neutral mark, indicating that South African agribusinesses remain pessimistic about business conditions. This survey was conducted in the second week of June and covered businesses across agricultural subsectors nationwide.

Discussion of the subindices

The ACI comprises ten subindices; six of them declined in Q2 2025, while the rest remained unchanged. Here is the detailed view of the subindices:

• The capital investments subindex dropped by 20 points from Q1 2026 to 33, which is the lowest level since 2006. This sharp decline mirrors the sector’s general mood, driven by the factors we highlighted above, rather than overall activity. For example, farmers have continued to invest in tractors and combine harvesters, amongst other infrastructure and expansion.
• The sub-index measuring export volumes deteriorated by 13 points from Q1 2026 to 38 in Q2. Concerns about the impact of the Middle East conflict on logistics, along with rising shipping costs, are the primary challenges here. Still, the actual activity points in a different direction, as exports have remained fairly strong. For example, in Q1 2026, South Africa’s agricultural exports totalled US$3,7 billion, up 11% from the same period a year ago.
• The general economic conditions subindex fell by 33 points to 28 in Q2 2026, the lowest level since Q3 2023. This is unsurprising, as the war in the Middle East has added uncertainty to macroeconomic conditions.
• On the positive side, the turnover subindex confidence increased by 17 points from Q1 2026 to 67. This was primarily driven by the maple harvest in grains, oilseeds and the various fruits and vegetables. Similarly, the net operating income subindex increased by 7 points to 50 in Q2 2026.
• The market share subindex lifted by 8 points to 61 in Q2 2026. This improvement in mood mirrors the ample harvest in horticulture and field crops, and the excellent export performance so far this year.
• The employment subindex increased by 16 points to 56 in Q2 2026. This is also unsurprising as the South African agricultural sector continues to create more jobs. In Q1 2026, farm jobs increased by 3% from the same period a year earlier to 960 000 jobs (up by 1% from the last quarter of 2025). This uptick in agricultural employment is unsurprising as the sector has generally enjoyed favourable production conditions in 2025 through to the start of this year.
• The general agricultural conditions subindex increased 22 points to 61 in Q2 2026. This improvement is primarily driven by the field crops and horticulture subsectors, which benefited from the La Niña rains. Meanwhile, the cattle industry and the pork producers remain constrained by animal diseases. The sector’s broadly improved operating conditions were also reflected in the recent GDP figures, with agricultural gross value-added expanding by 3,9% quarter-on-quarter (seasonally adjusted) in the first quarter of 2026, up from 0,4% in the last quarter of 2025.

Changes in interpretation
The subindices of the debtor provision for bad debt and financing costs are interpreted differently from the abovementioned indices. A decline is viewed as a favourable development, while an increase signals growing financial strain.

In Q2 2026, the debtor provision for bad debts indices fell by 6 points to 33, reflecting gains from the favourable harvest in field crops and horticulture. The financing costs index declined by 45 points to 17. This came as a surprise, as the recent uptick in interest rates has slightly increased borrowing costs.

Concluding remarks

Similar to the start of the year, the ACI results for Q2 2026 show that all is not well in South Africa’s agriculture.

“While the pace of importing vaccines has been encouraging, the challenge of the foot and mouth disease continues to linger. The livestock and pig industries are under immense financial pressure due to the disease, and these results reflect the challenge at hand. What remains key is a speedy vaccination process that will get us off the current worrying path. The cost pressures of the Middle East conflict and the increased likelihood of unfavourable weather conditions over the coming production season are top-of-mind concerns for agribusinesses,” said Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa (Agbiz).

ISSUED BY:
Wandile Sihlobo
Chief Economist, Agricultural Business Chamber of South Africa (Agbiz)
E-mail: wandile@agbiz.co.za
Source: https://agbiz.co.za/content/economic-research?page=agribusiness-confidence

Fact of the month

The world’s first combine harvester was patented by American inventor Hiram Moore in 1834. It was driven by a bull‑wheel and pulled by a team of 20 horses, mules, or teams of oxen (plus farmhands), allowing it to reap, thresh and winnow grain all at once. By 1839 that same machine could harvest more than ha in a single day.

Weather and climate

NATIONAL ASSESSMENT

The 2026 El Niño event continues to intensify across the central-eastern equatorial Pacific. The traditional Niño 3.4 index shows a clear and sustained increase, with the most recent seasonal mean reaching +1,51 °C during May to July 2026 and the July monthly value increasing to +2,03°C. The latest weekly Niño 3.4 index, centred on August 12, 2026, reached +2,7°C. Together, these observations indicate that El Niño is strengthening further and evolving toward a very strong event.

The Bureau of Meteorology’s model indicates that El Niño is firmly established. All models, including the bureau’s, forecast the tropical Pacific to continue warming through the southern hemisphere spring, likely peaking in late spring or summer. Given its current strength, in addition to the typical life cycle of an El Niño, this event is expected to persist into autumn 2027.

The graph below reflects current El Niño in the tropical Pacific. The graph supports the strong El Niño forecast.

The latest Climate Watch issued by the SA Weather Service (31 July 2026) states that above-normal rainfall is expected for most parts of the country during late winter and early-spring seasons. This above-normal rainfall forecast is particularly important for the winter rainfall region in the south and south-western parts of the country, which will likely have a positive impact on crop and livestock production. However, below-normal rainfall is expected in the eastern coastal areas during spring. This is significant for these regions as they approach their rainy season.

The onset of summer season is also indicating most parts of the summer rainfall regions experiencing below-normal rainfall due to the anticipated strong El Nino in the early summer. Therefore, the relevant decision-makers are encouraged to advise farmers in these regions to practice soil and water conservation, proper water harvesting and storage, and other appropriate farming practices.

Source: https://www.weathersa.co.za/api/wp/uploads/2026/08/SCOLF202607.pdf

SUNSPOTS

Sunspots are darker, cooler areas on the sun’s surface that arise due to disturbances in the sun’s magnetic field. Sunspots vary in numbers throughout the 11-year solar cycle.

According to a study published on Science Direct the rainfall rate can be directly related to the sunspot number, but shows different characteristics during solar maximum (the peak of the sun’s 11-year solar cycle) years. Though a lag correlation exists between sunspot number and rainfall, sunspots have an increasing effect on rainfall. Studies show that the more sunspots are present the higher the rainfall and the less sunspots the lower the rainfall.

ENSO (El Niño Southern Oscillation) occurs at irregular intervals between three and seven years causing global climate system variation. Considering this event occurs periodically, it might be triggered by the 11-year solar cycle as an energy source.

The graph below shows the latest 11-year solar cycle. An upward trajectory suggests that higher rainfall can be expected, characteristic of a La Niña. A downward trajectory suggests that lower rainfall can be expected, characteristic of an El Niña.

Between October 2020 to February 2025 the actual sunspot numbers were higher than the predicted values. July 2026 falls within the predicted range, with a monthly mean sunspot value of 78,1.

Sources: https://www.spaceweatherlive.com/en/solar-activity/solar-cycle.html
https://www.sciencedirect.com/science/article/abs/pii/S136468262200116X#:~:text=It%20was%20observed%20that%20rainfall,an%20increasing%20effect%20on%20rainfall
https://www.space.com/solar-cycle-frequency-prediction-facts
https://eos.org/articles/why-did-sunspots-disappear-for-70-years-nearby-star-holds-clues https://aip.scitation.org/doi/abs/10.1063/1.4930679?journalCode=apc#:~:text=ENSO%20occurs%20at%20irregular%20interval,cycle%20as%20an%20energy%20source

 

Market risk

GRAIN MARKET ANALYSIS

• Ending stock – National

Ending stock data is gathered from the NAMC. The estimates are reassessed and reported by the Grain & Oilseeds supply & demand estimates committee. The following is the projected ending stock for April 2027 in tonnages for the 2026/2027 season:

• White maize      =>        3 645 114 t
• Yellow maize     =>        1 357 210 t

The following is a summary of September 2026 ending stock projections for the 2025/2026 season:

• Wheat               =>        660 494 t

The following is a summary of the February 2027 projected ending stock for the 2026/2027 season:

• Sunflower         =>        76 821 t
• Soybeans         =>        549 835 t
• Sorghum           =>        79 164 t

The estimated white maize ending stock for April 2027 is 2 755 765 t. That is 816 910 t more than the ending stock for the 2025/2026 season. The estimated yellow maize ending stock for April 2027 is 1 340 630 t. That is 350 497 t more than the ending stock for the 2025/2026 season.

The graphs below show the predicted ending stock for the different commodities according to SAGIS data. A five-year average has been calculated to determine the estimated ending stock for the current season.

The estimated sunflower ending stock for the season 2026/2027 is 70 901 t based on the five-year average. This is 21 635 t more than the previous season.

The estimated soybean ending stock for the season 2026/2027 is 217 549 t based on the five-year average. This is 68 571 t less than the previous season.

• Crop estimations

According to the Crop Estimate Committee (CEC) sixth production forecast for 2026, the total area estimate for maize in South Africa is 2,716 million ha, which is more than the 2,597 million ha planted for the previous season. The total forecasted tons for white and yellow maize are 17 million t from the sixth forecast.

• Production forecast sunflower

The production forecast for sunflower seed is 874 805 t. The area estimate for sunflower seed is 570 100 ha while the expected yield is 1,53 t/ha.

• Production forecast soybeans

The production forecast for soybeans is 3,044 million t. The estimated area for soybeans is 1,212 million ha with an expected yield of 2,51 t/ha.

• Imports and exports – National

For the production season ending April 2027, 157 468 t of white maize and 723 036 t of yellow maize have been exported so far as seen in the graphs below (week 13).

• Parity prices

South Africa is a small producer compared to other countries and is thus a price taker (meaning that we cannot influence world prices). Because of this, our local prices are normally between import and export parity, which is illustrated in the figure below. An import parity price is defined as the price which a buyer will pay to buy the product on the world market. This price will include all the costs incurred to get the product delivered to the buyer’s destination.

An export parity price is defined as the price that a local seller could receive by selling his product on the world market e.g., excluding the export costs. The price which the seller obtains is based on the condition that he delivers the product at the nearest export point (usually a harbour) at his own expense.

The graph below reflects the Safex price, import parity and export parity of yellow maize as well as the Safex price of white maize. The import and export parity prices for white maize is not released by Grain SA for this period.

• Grain processing per province

For the marketing year 2025/2026, May 2025 to April 2026, the Free State dominates the white maize that is used for human consumption and gristing. North West consumed the second most white maize produced for human consumption for the marketing year.

The Free State used the most, white maize for animal feed and industrial usage with North West using the second most.

Mpumalanga processed the most yellow maize for consumption and gristing and the Cape provinces processed the most yellow maize for animal feed and industrial purposes.

• Exchange rate

NWK Group is exposed to foreign exchange rate risk in various business areas, such as commodity prices and trade imports, etc.

The USD/ZAR exchange rate fell to 15,9853 on August 24, 2026, down 0,11% from the previous session. Over the past month, the rand has strengthened 4,61% and is up by 9,17% over the last twelve months. Historically, the USD/ZAR reached an all-time high of 19,93 in April of 2025. South African rand – data, forecasts, historical chart – was last updated on August 24 of 2026.
Source: Trading Economics.

• Interest rate

All major rating agencies, i.e., Moody’s, S&P and Fitch, have South Africa’s credit ratings in sub-investment-grade territory. S&P, however, raised the country’s investment status for the first time in nearly two decades from BB- to BB.

The South African Reserve Bank is also having new discussions around the repo rate, how it is calculated and whether it should still exist. The rate has been fixed at 350 basis points above the country’s monetary policy rate since 2001. These discussions will be monitored over time to see how things unfold.

Source: https://www.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3479175
https://www.moneyweb.co.za/news/economy/kganyago-favours-ending-use-of-prime-rate/
https://www.moneyweb.co.za/moneyweb-radio/safm-market-update/prime-interest-rate-what-is-it-and-do-we-need-it/

• Interest rate

During the previous Monetary Policy Committee (MPC) meeting held on 23 July 2026 the committee decided to keep interest rates unchanged. The repo rate remained unchanged to 7% and the prime rate rose to 10,25%. The next MPC meeting will be held on 23 September 2026.

Interest rate movement:

30^th January 2025          –           11,00%
20^th March 2025            –           11,00%
29^th May 2025               –           10,75%
31^st July 2025                –           10,50%
18^th September ‘25        –           10,50%
20^th November ‘25         –           10, 25%
29^th January ‘26             –           10,25%
26^th March ‘26               –           10,25%
28^th May ‘26                  –           10,25%
23^rd July ‘26                  –           10,50%

• Current interest rate

The South African Reserve Bank kept its key repo rate unchanged at 7% on July 23, surprising most analysts who had expected a 25-basis-point increase, as policymakers sought to support a fragile economic recovery despite persistent inflation risks.

The Monetary Policy Committee voted 4-2 to hold rates, citing a slightly improved inflation outlook and weaker growth, while reaffirming its objective of steering inflation toward its 3% target over time.

Governor Lesetja Kganyago warned that renewed conflict in the Middle East, which has driven up oil and fertilizer prices, could warrant further tightening if higher fuel costs spill over into food prices and core inflation. South Africa’s annual inflation accelerated to 5% in June, although the central bank now expects inflation to average 4% in 2026, down from its previous forecast of 4,4%.

The SARB also raised its 2026 growth forecast to 1,4% from 1.2%, while cautioning that economic momentum could weaken in the coming quarters.

Source: South African Reserve Bank: Trading economics

•  Inflation rate

As the inflation rate is a driver for increases and decreases in interest rates the current rate and forecast have to be assessed to foresee further increases in the interest rate.

• Current

South Africa’s annual inflation rate eased to 4,3% in July 2026 from a two-year high of 5% in the prior month and below analysts’ estimates of 4,5%. This marked the first slowdown in five months, helped by softer transportation costs (8,9% vs 12,7% in June).

Fuel prices slowed to 20,6% from 34,3%, reflecting lower South African petrol prices as crude oil prices pulled back from their early-Middle East-conflict highs. The easing was further supported by food and non-alcoholic beverages (0,9% vs 1,6%), driven by lower cereal prices (-2% vs -1,5%) and slower meat inflation (1,5% vs 5,1%).

Price growth also moderated for housing and utilities (5,2% vs 5,5%), on smaller municipal tariff increases. Meanwhile, core inflation, which excludes prices of food, non-alcoholic beverages, fuel, and energy, inched up to 4,2% from 4,1% in June, reaching the highest since July 2024. On a monthly basis, the CPI rose by 0,2% in July, down from a 0,7% increase in the month before.

Source: Statistics South Africa.

• Inflation rate forecast

Inflation Rate in South Africa decreased to 4,3% in July from 5% in June of 2026. Inflation RATE in South Africa is expected to be 4,9% by the end of this quarter, according to Trading Economics global macro models and analysts’ expectations. In the long-term, the South Africa inflation rate is projected to trend around 3,4% in 2027 and 3% in 2028, according to our econometric models.

• Highlights in the agrochemical sector

On average month-on-month period, insecticide prices decreased by 4,19%, herbicide by 1,97% and fungicide by 15%.

On a year-on-year basis, chemical prices for insecticides and fungicides decreased by 3,41% and 1,74, respectively, and herbicides increased by 8,9%.

 

• Fuel costs

The wholesale diesel price is currently R26,17/litre for diesel 0,05% and R26,40/litre for diesel 0,005%. From 5 August 2026, diesel 0,005% was expected to decrease by approximately R2,90/litre, while diesel 0,05% was expected to decrease by approximately R2,73/litre.

Diesel prices decreased from July to August. At the same time, the rand has remained relatively strong against the US dollar, trading at R16,14/$ on 17 August 2026.

Crude oil prices remained above $80/barrel from 14 July and reached $100/barrel on 24 July. The increase was driven by uncertainty surrounding the conflict in the Middle East and anticipated negotiations between the US and Iran. Crude oil prices have since decreased to approximately $88/barrel, largely due to the lack of progress in negotiations. Although shipping through the Strait remains limited, there are currently no significant concerns regarding global supply shortages.

Sources: https://www.grainsa.co.za/upload/report_files/Input-Monitoring-Report-17-August-2026.pdf

Future prices

The graphs below illustrate the market sentiment for maize, in the form of future contracts, for the upcoming contract months. The market sentiment is the expectation of supply and demand fundamentals relating to white‑ and yellow maize in South Africa.

DOMESTIC MARKET OVERVIEW

The recent increase in maize prices has been driven largely by developments in international markets. Ongoing production risks affecting the current maize crop, particularly in North America, have had a significant influence on global market sentiment and price formation. At the same time, challenges facing the European market are expected to increase import demand for maize, placing additional upward pressure on international prices and further supporting the current price trend.

Fraud risk

FRAUD AWARENESS

• Behavioural Red Flags of Fraudsters

Fraud often leaves a trail of tell tale behaviours. A recent 2026 Occupational Fraud Report found that 75 % of fraudsters exhibited at least one of eight common behavioural clues.

Red flag	Typical signs
Living beyond means	Purchasing expensive cars, watches, or homes that far exceed a normal salary.
Financial difficulties	Heavy personal debt, poor credit, or sudden cash crunches.
Over‑close vendor/customer ties	Becoming unusually friendly or selectively favouring an outside supplier or client.
Control issues	Refusing to share duties or allow cross‑training, keeping total control over a process.
Irritability/defensiveness	Getting angry, overly suspicious, or aggressive when asked basic work‑related questions.
Bullying or intimidation	Using intimidation to prevent coworkers from examining records or tasks.
“Wheeler‑dealer” attitude	Acting overly cunning, sharp, or willing to bend rules to get things done.
Divorce/family problems	Hidden personal issues (e.g. drug, alcohol, or gambling habits) that may drain money.

Why it matters

Spotting these signs early can help organizations intervene before fraud escalates. Encourage a culture where employees feel safe to raise concerns, and ensure duties are regularly rotated to reduce the risk of control related abuse.
Source: https://www.acfe.com/-/media/files/acfe/pdfs/rttn/2026/2026-report-to-the-nations.pdf