futures

Zambian farmers enter futures market

Zambian farmers and grain buyers will have access to a futures market from Monday. A landmark deal between Zambia Agricultural Commodity Exchange (ZAMACE) and the Johannesburg Stock Exchange (JSE) has been brokered to open the door futures market for Zambia.

Futures will give farmers the ability to sell grain and lock in a pre-harvest price, while in the planting or growing stage.

“Subscribers are advised that JSE will introduce Zambian white maize, wheat and soya bean contracts that will be priced in US dollars,” says a statement released by the JSE.

According to the statement, the South African Reserve Bank granted the JSE a special dispensation to provide Zambian referenced grain derivatives contracts in US dollars to non-residents, qualifying South Africans and Common Monetary Area corporate entities.

“The new contracts will be introduced in both live feed and end of the day records from Monday, March 20, 2017,” the JSE said.

ZAMACE executive director Jacob Mwale urged farmers and traders to register.

“This partnership will help to bring liquidity to the market through ZAMACE as we would be in a position to project prices of crops not yet harvested or even planted as is the case in South Africa and other regions,” he said.

Victor Nyasulu, a chartered global management accountant and business consultant, said futures were a form of financial instrument termed as a derivative.

“In short, the futures gives the farmer an immediate asset that could be traded or used to access funds for expansion and settlement of obligations before the crop is harvested,” he said.

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