Efforts to bring greater transparency to South Africa’s grain pricing system suffered a setback as the Johannesburg Stock Exchange (JSE) announced the cancellation of its long-awaited basis futures contract, citing internal software limitations.
The contract, designed to measure the price difference between the Randfontein-based market and local silos, was intended to strengthen the cash market for grain commodities and reduce the sector’s overreliance on the JSE Commodity Derivatives Market (formerly Safex) for price discovery. Stakeholders had been laying the groundwork for the project for four years.
During a recent advisory committee meeting, the JSE revealed that the contract would be postponed indefinitely until a new internal software system capable of handling all silo locations is implemented. Anelisa Matutu, Head of Commodities at the JSE, confirmed that the exchange is evaluating proposals from multiple system providers and will communicate a detailed project roadmap once a technology partner is selected.
The South African Cereals and Oilseeds Trade Association (SACOTA) explained that the cancellation was partly due to legal concerns over limiting the pilot project to just 10 silo locations, which could be considered unfair or inequitable to other storage operators. SACOTA emphasized that the software itself had been a known limitation and expressed disappointment that market participants would now need to explore alternative platforms to trade on the basis market.
Economist Heleen Viljoen of Grain SA highlighted the importance of the basis futures contract for improving transparency in grain pricing. “Futures contracts derive their value from the physical cash market. Currently, our market relies more on futures prices than actual physical sales, which is why tools that strengthen the cash or basis market are essential,” she said.
While Grain SA remains hopeful that the contracts will eventually be implemented, Viljoen stressed that private basis trading platforms, which have emerged over the past few years, offer a practical alternative in the interim.
The cancellation underscores the ongoing challenge of modernizing South Africa’s grain trading infrastructure. Yet, the JSE remains committed to investing in technology to support the commodities market and ensure fair, transparent price formation across the country’s agricultural sector.
