Nonetheless, while we guard against undue optimism, the proverbial “green shoots” of a recovery may be starting to appear. Although still well below par, the average prices of South Africa’s major commodity price exports are off their early-2016 lows. At the same time, the recent fading of El Niño conditions in the South Pacific raises hopes of a more normal agricultural season in 2016/17.
If that does turn out to be the case, we could be looking at both a rebound in farm production and lower agricultural prices. Such a reduced drag from drought conditions and falling resource prices should significantly ease the downward pressure on corporate profits, which may have troughed already.