The South African Government has approved the introduction of Zambian grain futures on the Johannesburg Stock Exchange (JSE). The move will enable the Commodity Derivatives market to extend its existing trading and clearing platform to the Zambian grain market and thereby not only provide a tool for price discovery and price risk management, but also provide liquidity to the existing Zambian market participants. Furthermore, South African and Common Monetary Area (CMA) qualifying corporate entities involved in the agricultural grain industry will also have easy access to the USD traded and cleared products.
It is hoped that access to finance will also be improved with banks able to extend credit to market players on the back of available derivative instruments such as grains futures contracts. The JSE is already in discussions with the Zambia Marketing Commodity Exchange (ZAMACE), and other various industry players in Zambia and South Africa to finalize the standardized contract specifications for white maize, wheat and soya beans. JSE is further exploring the possibility of partnering with potential storage operators that will provide guaranteed quality and quantity of grain.