In a press release published on 20 July, Grain SA said it was “deeply disappointed” by the JSE’s decision to return to a single reference point (SRP) methodology after a two-season pilot of the multiple reference point (MRP) model.
At the heart of the matter is the way the JSE calculates soya bean location differentials, which are the transport-related price adjustments applied to the crop’s futures contracts at different registered delivery silos.
Under the SRP system, one location is designated as the country’s benchmark delivery point. Every other registered silo receives a positive or negative location differential based on its theoretical transport cost to or from that single reference point.
Grain SA CEO Tobias Doyer said the SRP no longer reflects how South Africa’s soya bean market operates.
He argued that soya beans are not traded through a single central hub but are delivered to several crushing plants located in different production regions. As a result, using one reference point could create transport assumptions that do not match actual commercial grain movements, leading to price deductions that do not accurately reflect commercial reality.
The MRP model was developed to address this problem. Rather than assuming all soya beans are valued relative to one central location, it recognises several major demand centres where the crop is processed.
The model uses production patterns, crushing capacity, transport distances, and regional supply and demand to calculate location differentials that more accurately reflect where soya beans are actually marketed.
According to Doyer, this provides a more equitable and scientifically robust pricing methodology because it reflects where soya beans are actually processed instead of assuming all soya beans move through a single benchmark location.
The MRP model was piloted over two marketing seasons after the JSE invited industry stakeholders to develop alternatives to the existing methodology. According to Grain SA, the pilot was assessed against five predetermined criteria: trading activity, market participation, stock management, the redelivery of JSE silo receipts, and stakeholder feedback.
Despite acknowledging improvements in trading volumes, open interest, and physical deliveries during the pilot, the JSE concluded that these gains could not be directly attributed to the MRP model and therefore chose to retain the SRP system.
Doyer, however, disputed this conclusion, arguing that the available evidence demonstrated that the MRP model had performed well against the agreed evaluation criteria.
He also questioned the decision-making process, arguing that the JSE’s final decision did not adequately reflect the recommendations of the technical committee appointed to assess the pilot.
He further argued that the JSE had not provided sufficient criterion-by-criterion justification for why the model failed to meet the agreed evaluation framework.
Access to market information under scrutiny
Doyer said another major concern was unequal access to market information.
He said that South Africa’s soya bean processing industry is concentrated among relatively few crushing facilities, meaning processors have detailed information on purchasing patterns, stock levels, and demand that is not available to producers.
According to him, information collected under the Marketing of Agricultural Products Act (No. 47 of 1996) could have been supplied to the JSE in aggregated form to allow a more robust evaluation of the MRP model without disclosing commercially sensitive data.
He also questioned why historical data limitations appeared to have been applied differently when comparing the proposed methodology with the existing SRP system.
Doyer further criticised the final notice for not adequately addressing concerns raised by a JSE-appointed expert consultant about delivery points with no location differential and producers’ inability to take advantage of price differences between locations.
He said the decision has implications beyond what appears to be a technical pricing formula. Grain and oilseed producers are already operating under significant financial pressure from rising input costs and tight margins. In his view, an SRP could create artificial transport assumptions that do not reflect actual grain flows, potentially reducing the prices producers receive in certain regions.
Doyer also warned that where processing capacity is concentrated and access to commercial information is unequal, pricing distortions may create opportunities for some value chain participants to exercise market power to the disadvantage of producers.
Proposed changes open for comment
The JSE has proposed reverting to an SRP system from 1 March 2027 and replacing Randfontein with Driefontein as the benchmark location. Stakeholders have until 14 August 2026 to submit their comments.
Doyer said Grain SA could not support either the return to an SRP or the proposed relocation to Driefontein without a transparent assessment of the financial implications for soya bean producers across South Africa.
He added that the organisation will continue advocating for a location differential methodology that is transparent, evidence-based, and equitable.
Farmer’s Weekly reached out to the JSE for comment, and the article will be updated should it receive a response.
