Astral Foods

Update on the soft commodity market and the impact to the value chain with focus on Astral Foods

The soft commodity markets have been elevated since the Russian invasion of Ukraine. This has pushed up global food price inflation and hurt consumers as these costs have to be passed on.

However, sharply rising costs cannot be quickly passed on to the consumer there is usually a lag. It is this lag that causes margin squeeze to food producers. They try and recover higher cots but often cannot due to the consumer environment. This s where scale & efficiency come into play

Astral Foods is South Africa's largest poultry producer currently producing 5.8 million birds per week moving to 6.2 million by Q2 2023.

This note gives my current view on the sector and Astral Foods. But, I will post another note soon as this week the DTI Minister Patel suspended import duties for 12-months on five importing countries (Brazil being the largest). This could be a material threat to domestic producers so that is an additional caveat on investing currently in the sector.

https://drive.google.com/file/d/1H7ohnHXPr-nWfX_9JcAA0b9MTVLHm7Ru/view?usp=sharing