There are a few key points to understand regarding this trial:

•   No other commodities are being considered for inclusion in this model.
•   All export and import demand points are excluded from the trial.
•   Only facilities with a minimum crush volume of 5 000t/month are included. This decision was made to reduce the impact of crushing plants withdrawing or suspending crushing activities.

The third point was only included at the end of 2024, and therefore the JSE decided to exclude Delmas, Nasrec, and Winterton (Aerodon) from delivery points for the 2025/26 marketing season.

Agbiz Grain Quarterly asked a few key role-players to share their insights regarding the experiment’s progress and impact so far.

Agbiz Grain

According to Jerry Maritz, chairperson of Agbiz Grain, it is important to note that Agbiz Grain’s members generally provide handling, storage, and marketing services to the grain and oilseeds value chain and therefore render services to producers, buyers, and the processing industry.

“We see our role in the grain and oilseeds value chain as an indispensable link between producers, buyers, and processors,”  Maritz says, adding that these role-players are represented by several industry bodies, such as Grain SA, the Sunflower and Soybean Forum, the South African Cereals and Oilseeds Trade Association (Sacota), and the JSE. Driven by one of these forums, the decision was made to test the multiple reference point system.

“As a service provider to role-players on both sides of the grain value chain, Agbiz Grain is in favour of any adjustments that lead to improved market efficiencies and therefore we support the decisions by value chain role-players. However, Agbiz Grain will only provide input regarding the practical feasibility of industry suggestions. So far there hasn’t been any issues with the trial’s feasibility. It would be interesting to determine whether the trial has unlocked  intrinsic value for our members.”

Grain SA

According to Heleen Viljoen, economist at Grain SA, the JSE published a set of seven success factors against which the model would be measured. “Not all of these factors are quantifiable, but of those that can be measured, the initial results are generally positive.”

One of these factors is that there should be no higher re-deliveries of silo certificates, especially not in the specified zero zones. Although re-deliveries outside the zero zones were seemingly higher, the number of times a certificate is re-delivered, in addition to the build-up of stocks at a specific silo, indicate that higher deliveries require closer scrutiny. The silos with high re-deliveries also correspond to silos that had high re-deliveries in the past.

One of the other measurable factors is the open interest in specific contracts. “Comparing the open interest for March 2024 (the first month of testing the model) and May 2024 (first major delivery month) to that of the previous few seasons, the model shows strong interest,” Viljoen says. “Although the 2025 contracts are underperforming, the market must also consider that the size of soya bean contracts has doubled and that this change has not necessarily been well received by all market players, thus affecting interest in the contracts.”

While the technical aspects of the model are quite complex, Viljoen says the overall functioning thereof is easy to understand. “Essentially, the total supply and demand factors pertaining to a specific silo complex will determine the final economic value needed for the grain to flow.”