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JSE and Zambian Commodity Exchange (ZAMACE) to cooperate on guaranteed derivatives trading and clearing

Filed under: Business,Latest News |
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agricultureThis is a very exciting time for the Zambian agricultural community and the opportunities to market and manage price risk of grain have been expanded for all, says Johannesburg Stock Exchange (JSE) Director – Commodities & Key Client Management, Chris Sturgess.

Sturgess feels the JSE are finally in a position to offer the Zambian community a full range of exchange products.

“Through the Zambian Commodity Exchange (ZAMACE) we have the ability to license warehouses according to the Zambian Agricultural Credits Act and will soon be able to provide a spot exchange for price discovery on the day and with the JSE through our clearing house. This will offer guaranteed derivatives trading and clearing for market participants to manage future price risk,” Sturgess explained.

During the upcoming Agritech Expo, which will be held in the Zambian agri-hub of Chisamba from 14-16 April, the JSE will be sponsoring the Commercial Farmers Focus Day workshop and Sturgess will address attendees on “price risk management tools for the Zambian grain market”.

About 15 000 farming professionals, from emerging, to small holder, to commercial farmers, to agri experts, along with 130 exhibitors, are expected at the third annual Agritech Expo, which is owned by the Zambia National Farmers Union. Last year’s VIP visitors included Zambian President Edgar Lungu, the Vice President, Inonge Wina, as well as the Zambian and German Agriculture Ministers.

Optimistic about Zambia’s agricultural future
Sturgess says he is very optimistic about the future of agriculture in Zambia: “It is true that we require consistent Government policy to build a futures market, but the opportunity for Zambia to go from a 3 to 4 million ton grain-producing nation to a 10 million ton grain-production country will be the true test to decide whether we have succeeded in building the sector. The world needs food and Zambia has the potentialto make it happen.”

Sturgess says his advice to Zambian commercial farmers is simple: “Futures and options may sound complicated, but you should use every opportunity to learn more about these well-established products that will expand your marketing opportunities and remove price risk from your business. Sign up with a broker who can provide you with access to the JSE derivatives market and start hedging. Be sure to start off small and that you understand the difference between hedging and speculating on the market to gradually build your own confidence in these new instruments.”

SA commodity derivatives market well recognised

According to Sturgess, the South African commodity derivatives market is well recognised as a success story, following the deregulation of the agricultural markets in the mid-1990s. He adds: “It was due to consistent application of Government policy to support the free market, and the fact that we had an already large production base of agricultural commodities to trade, a solid banking sector to assist with settlement and the commitment of members who went out and educated the client base from farmers to millers, on how to use futures and options to manage price risk. Globally the South African derivatives market ranks in the top 15 derivative exchanges according to FIA rankings.”

The full interview with Chris Sturgess can be accessed here: http://www.agritech-expo.com/JSE

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