Grain SA has expressed deep disappointment and strong disagreement following the Johannesburg Stock Exchange’s (JSE) decision to abandon the Multiple Reference Point (MRP) model for calculating soybean location differentials, opting instead to revert to a single reference point system.
The MRP model, piloted on deliverable soybean futures contracts over two marketing seasons, was developed by Grain SA alongside technical specialists to replace the traditional single-reference system—a methodology long criticized for failing to accurately account for geographic variations in South Africa’s soybean demand.
Failure to Follow Agreed Evaluation Framework
Grain SA argues that the JSE’s final decision lacks transparent, criterion-by-criterion reasoning against the evaluation framework established at the start of the trial. The pilot was meant to be assessed by an industry-nominated technical committee across five core metrics:
- Trading activity (including volumes and open interest);
- Active market participation;
- Stock management in zero-differential areas;
- Redelivery of JSE silo receipts; and
- Stakeholder feedback and market experience.
While the JSE acknowledged that trading volumes, open interest, and physical deliveries improved during the trial, it attributed these gains to external market conditions rather than the MRP model. Grain SA criticized this stance, stating that quantitative evidence should be thoroughly assessed rather than dismissed simply because absolute causality is difficult to isolate.
The producer body also expressed concern that qualitative feedback—such as claims that the MRP model was not “simple enough”—carried disproportionate weight relative to its measurable performance.
“A methodology should not be rejected merely because it is more sophisticated than the existing system. The appropriate test should be whether it is scientifically sound, objectively measurable, operationally implementable, and capable of producing a more equitable market outcome.” — Grain SA
Information Asymmetry and Market Power
A primary concern for producers is the ongoing information asymmetry within the soybean value chain. Processing capacity is heavily concentrated among a small number of large players, placing farmers at a distinct disadvantage when attempting to assess cash-market basis information.
While the JSE cited commercial sensitivity and POPIA constraints as barriers to accessing accurate crushing data, Grain SA pointed out that established, confidential data-sharing mechanisms—similar to statutory measures under the Marketing of Agricultural Products Act—could easily have been implemented.
Producers Cannot Absorb Market Inefficiencies
Grain SA warned that producers operating under tight margins, high input costs, and substantial production risks cannot afford further market distortions. A single reference point system can create artificial transport assumptions, exposing farmers in certain production areas to unjust deductions that do not align with actual stock movements.
Following the decision, the JSE proposed replacing Randfontein with Driefontein as the new single reference point starting 1 March 2027, inviting stakeholder comments by 14 August 2026.
The Looming Hunger Crisis South Africa Cannot Afford to Ignore
Grain SA confirmed it will not support the return to a single reference point nor the relocation to Driefontein without a comprehensive assessment of the financial impact on farmers. The organization plans to submit formal comments before the deadline and continue advocating for an equitable, evidence-based location differential methodology.