South African grain and oilseed producers are operating under severe financial pressure with narrow margins, rising input costs and substantial production risk, and can therefore not afford additional inefficiencies resulting from a location differential methodology that may not adequately reflect the geographic distribution of soybean production and consumption.
Industry body Grain SA says, in this regard, that the JSE's intention to return to a single reference point can create artificial transport assumptions and expose producers in certain production regions to deductions that do not correspond with actual commercial stock movements.
It may also create opportunities for value chain roleplayers to abuse market powers for their own benefit. These distortions become particularly concerning where concentrated market power and access to information could influence physical delivery patterns and basis formation to their advantage.
"These distortions become particularly concerning in a market characterised by concentrated processing capacity and unequal access to commercial information.
"The JSE has announced its intention to return to a single reference point and has proposed replacing Randfontein with Driefontein from the marketing season starting on March 1, 2027. Market participants have been invited to comment on this proposal by August 14," Grain SA states.
