South African food producers climbed to an almost eight-year high after JPMorgan Chase recommended buying the stock, citing robust prospects.
“We see a positive outlook for South African food producers in 2026,” JPMorgan analysts Shaun Chauke and Elena Jouronova wrote in a report Thursday.
That’s due to softer commodity prices, improved operating-cost structures thanks to investment in manufacturing facilities, and easing local inflation that could boost volumes, they said.
JPMorgan gave new overweight ratings to Tiger Brands, AVI and Premier. The FTSE/JSE Food Producers Index rallied as much as 1.7% in Johannesburg to the highest intraday level since March 2018.
The gauge is outperforming the broader South African bourse, which fell for a second straight day, and has the best sectoral showing on the exchange today.
The bank sees food producers as a better play on the South African consumer story when compared with food retailers because they stand to derive greater benefit from lower commodity costs, and grocers are seeing penetration of private labels stagnate while key food brands experience sustainable market share.
“These factors are enabling producers to maintain a strong market position in a dynamic industry, while also helping them withstand the challenges of a weaker consumer environment and the strong bargaining power of retailers,” Chauke and Jouronova wrote.
Since peaking at almost 8% in 2022, South Africa’s annual inflation rate has eased to 3.5%, spurring a series of interest-rate cuts that have reduced the cost of debt for consumers in Africa’s biggest economy.
The United Nations’ food-price index, which tracks five commodity groups, declined for three straight months through November and is on track to show an annual decrease for 2025.
Premier Group, which produces bread, corn products and flour, is JPMorgan’s top pick in the sector after its recent purchase of RFG Foods, the analysts wrote.
