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Exchange Traded Agricultural Derivatives

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Publication date
20/06/2018
Number of Pages
15
Language:
English
Type of Publication:
Working Papers & Briefs
Focus Region:
Sub-Saharan Africa
Focus Topic:
Market / Trade
Type of Risk:
Market-related
Commodity:
Crops
Author
Johannesburg Stock Exchange

Agricultural markets across the world have moved away from government price intervention towards economic based  markets.  This  has  been  mainly  due  to  the pressure of  a  globalising  world  economy  as  well  as failure of costly agricultural subsidy regimes and state controlled  agricultural  marketing  boards.  It  is  now common  for  smaller  commodity  markets  to  form exchanges, either cash or futures, which are playing an integral role in facilitating marketing and ensuring price transparency. Bulgaria, Poland, Romania and Hungary are  examples  of  countries  experiencing  the  same dynamic growth in their commodity markets as South Africa.  The  demise  of  agricultural  marketing  control boards  in  South  Africa  during  the  early  1990’s  and extensive  liberalisation  was  the  background  that stimulated the formation of Safex’s Agricultural Markets Division to trade agricultural derivatives.