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The Johannesburg Stock Exchange
– JSE- is soon to offer derivative contracts for Zambian maize grain, starting
next year.
Chris Sturgess, Director of
Commodities at the JSE, says the development will help local farmers hedge the
market prices of their produce against global economic volatility.
Amid concerns of global
food prices instability, Sturgess has explained in an email statement that the
JSE will offer either futures or option contracts to help farmers manage the
price risk for their maize.
‘A Zambian farmer ... would
like to, while the crop is maturing, lock in favourable prices that they will
achieve once they harvest the product.
‘In the current environment
the farmer really only finds out the price of the grain at harvest time’,
Sturgess has explained, adding that with derivatives both farmers and millers
are able to hedge themselves and lock in favourable prices.
In the advent of this, Sturgess
also says the JSE will expect farmers to have increased access to finance from
the banks, as well as other additional financial products.
‘So the ability to finance
grain on a warehouse receipt will also be so much easier for the farmer or any
other participant who has access to stock’, Sturgess has further explained.
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