Zambian grain debut on Jo’burg exchange as futures markets beckon

ZAMBIA – Zambian farmers will now be able to sell their crops, which are not yet harvested or planted, through the official introduction of the Zambian grain futures contracts on the JSE Limited effective March 20, 2017.

It is envisaged that the partnership between Zambia Agricultural Commodity Exchange (ZAMACE) and the JSE futures market will help boost liquidity in the Zambian agricultural commodity market.

Having a futures market allows both producers such as farmers and consumers such as milling companies to hedge their exposure. This is similar to buying crop insurance for farmers.

According to a statement issued by the JSE information services division, subscribers are advised that JSE will introduce Zambian white maize, wheat and soya bean contracts that will be priced in US dollars.

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“The South African Reserve Bank has granted JSE Limited special dispensation to provide Zambian referenced grain derivatives contracts in US dollars to non-residents, qualifying South African and Common Monetary Area corporate entities.

“All contracts in the common derivatives live market data feed as the end of day data records will be traded and cleared in US dollars.

The new contracts will be introduced in both live feed and the end of day records from Monday March 20, 2017,” it stated.

Commenting on the matter in a telephone interview yesterday, ZAMACE executive director Jacob Mwale advised farmers and traders to register as participants with ZAMACE for both the spot trade and the Zambian grains futures contracts with the JSE.

“We are working with JSE, and this partnership will help bring liquidity to the market through ZAMACE.

This development will enable ZAMACE to project prices of crops not yet harvested, or even planted as is the case in South Africa and other regions,” Mr Mwale said.

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A futures market is a central financial exchange where people can trade standardised futures contracts.

These are contracts to buy specific quantities of a commodity such as maize or wheat or a financial instrument at a specified price with delivery set at a specified time in the future.

These types of contracts are also called “derivatives” because the values of these instruments are derived from another asset class such as a commodity or a company’s share price.

March 20, 2017; https://www.daily-mail.co.zm/?p=96465

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