Exploring solutions to drive market growth
The new year has been marked with a wave of market activity amid notable volatility. Southern Africa faced the harsh impacts of extreme weather, with hot and dry weather conditions felt in South Africa, Zimbabwe, Malawi, Zambia, and Namibia. Geopolitical tensions, such as the continued Russia-Ukraine conflict and escalating situations in the Middle East, further shaped the macroeconomic landscape leading to oil price fluctuations. The effects of these interconnected events reverberated across most industries, spilling over into the agricultural sector, resulting in shifts to the price and production of grains, most noticeably, white maize (WMAZ), a Southern African staple food.
In the first quarter of 2024, the spot price for WMAZ rose to R5,350 then R5,553 in April, surpassing its highest closing price of R5,470, observed in November 2022. The Crop Estimates Committee also estimate a notable decline in production figures for WMAZ, which have decreased by approximately 25% compared to the previous season. Now, while many find these figures unsettling, some contend that they underscore a more urgent concern.
With the markets characterised by volatility, rising prices and decreased WMAZ production, some have turned their attention to concerns surrounding the accessibility and availability of maize. This comes considering that total domestic consumption is estimated to be approximately 5,4 million tons and an anticipated 1.5million tons export demand.
In response to these concerns and following extensive market engagement, the JSE remains committed to mitigating the constraints associated with the access to stock held on JSE receipts.
To ensure the integrity of the JSE silo receipt is constantly preserved, the comprehensive monthly audit process will be continued. Our monthly stock audits provide invaluable insights into demand pressures based on booking slot activities and stock levels held in JSE registered silos. The JSE will continue to analyse for out loading capabilities of approved silo operators. We request holders of JSE silo receipts, to please report any issues associated with access to stock in lieu of a JSE silo receipt.
Based on feedback from stakeholders, the contract specification amendment related to section 9 of Appendix C, which allows JSE receipt holders priority access to 25% of out loading slots, is not utilised sufficiently. To remedy this gap, the JSE will continue to promote awareness of this commitment by JSE Storage Operators, while monitoring its use as a means for long position holders to secure access to stock during main hedging months.
Should the priority access of 25% be fully utilised, the JSE will work collaboratively with silo operators to investigate the revision of the percentage allocation.
The JSE will also continue to oversee and enforce compliance on approved JSE Storage Operators and will take appropriate action if a Storage Operator fails to comply with its obligations as recorded in the Contract Specifications.
Through these measures, as the JSE, we reaffirm our commitment to collaborating with the market to explore and address solutions to drive market growth. With great enthusiasm, we eagerly anticipate the fruitful path that lies ahead.