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Grain SA is deeply disappointed by, and disagrees with, the decision by the Johannesburg Stock Exchange (JSE) not to retain the Multiple Reference Point (MRP) model for calculating soybean location differentials and to revert to a single reference point system.
The JSE’s decision is set out in its Market Notice on the outcome of the Multiple Reference Points Model pilot.
For several years, the JSE called on industry stakeholders to propose credible alternatives to the existing single reference point methodology, which does not accurately account for the geographic variation in soybean demand. Grain SA, together with independent scientists and technical specialists, invested significant time and resources in developing and testing an alternative methodology supported by independent scientific research, market data and practical analysis. This methodology sought to achieve a more equitable and accurate matching of demand to supply.
The MRP model was subsequently piloted on the deliverable soybean futures contract over two marketing seasons. At the beginning of the pilot, the JSE confirmed that the model would be assessed against five predetermined criteria and that a technical committee nominated by industry role-players would review the model based on the following:
Grain SA understands that the recommendations of this technical committee apparently were not adequately reflected in the final decision-making process or supporting motivation.
Grain SA is concerned that the JSE’s final decision and motivation do not provide sufficient and transparent, criterion-by-criterion reasoning against the agreed evaluation framework.
The JSE acknowledged that trading volumes, open interest and physical deliveries improved during the pilot period. However, it concluded that these improvements resulted from external market conditions and that no causal relationship with the MRP model could be demonstrated.
Grain SA believes that the available quantitative evidence must be assessed fully and should not be obscured by recent changes to the contract size or dismissed solely because causality could not conclusively be isolated..
The final notice instead places significant emphasis on challenges relating to the availability of accurate soybean crushing data, differences between crushing facilities, the use of historical information, transparency and divergent views among stakeholders.
While these considerations may warrant further investigation, Grain SA believes they do not constitute a sufficiently detailed or factual explanation of how the model performed against all five of the JSE’s original success criteria.
The concentration of soybean processing capacity and the resulting imbalance in market power also contribute to information asymmetry. Where critical market information is held by a limited number of participants, producers are placed at a disadvantage and the transparency and competitiveness of the market may be compromised.
Grain SA remains particularly concerned about the inability to obtain the information necessary for the accurate and effective calculation of soybean location differentials.
Relevant sensitive information is already collected through statutory measures under the Marketing of Agricultural Products Act. Both historical and current information could be accessed, in an appropriately aggregated and confidential form, to support a more comprehensive assessment.
The JSE states that confidential supply-and-demand information could not be disclosed because of commercial sensitivity and POPIA-related considerations and consequently used dated information. However, Grain SA emphasises that there are appropriate mechanisms that could have been considered through which independently verified information could be submitted confidentially to the JSE without disclosing commercially sensitive company-level data as is the case with statutory measures.
The existing single reference point methodology also relies on historical information, which raises questions about whether the data limitations identified by the JSE were applied consistently when comparing the two methodologies.
Confidential information is already used in several regulated market processes. The absence of an appropriate data-sharing mechanism should therefore not, in Grain SA’s view, automatically disqualify a methodology that was specifically developed to address recognised shortcomings in the existing system.
Producers already have limited access to cash-market basis information. When essential market information is concentrated among a small number of value-chain participants, producers cannot independently assess whether location differentials accurately reflect commercial market conditions.
Grain SA is also disappointed that the final notice does not adequately address the concerns raised by Prof Roberts, who was appointed by the JSE as an expert consultant. These concerns included zero-differential delivery points and the inability of producers to arbitrage differences between locations.
Stakeholder feedback was only one of the five criteria established for evaluating the pilot. Grain SA is therefore concerned that qualitative perceptions - including claims that the methodology was not sufficiently simple or easily understood -appear to have carried disproportionate weight relative to the model’s quantitative 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 submitted factual information demonstrating that the MRP model could operate efficiently and that the methodology represented a meaningful improvement in addressing the distortions associated with a single reference point.
The organisation therefore views the decision as insufficiently balanced and not adequately supported by a transparent assessment of the available evidence.
Grain and oilseed producers are operating under severe financial pressure, with narrow margins, rising input costs and substantial production risk. They cannot afford additional inefficiencies resulting from a location differential methodology that may not adequately reflect the geographic distribution of soybean production and consumption.
A single reference point can create artificial transport assumptions and expose producers in certain production regions to deductions that do not correspond with actual commercial stock movements.
It may also create opportunities for value-chain role players to abuse market powers for their own benefit. These distortions become particularly concerning where concentrated market power and access to information could influence physical delivery patterns and basis formation to their advantage.
These distortions become particularly concerning in a market characterised by concentrated processing capacity and unequal access to commercial information.
The JSE has announced its intention to return to a single reference point and has proposed replacing Randfontein with Driefontein from the marketing season commencing on 1 March 2027. Market participants have been invited to comment on this proposal by 14 August 2026.
Grain SA cannot support the proposed return to a single reference point, nor the relocation of that reference point, without a comprehensive and transparent assessment of the potential financial consequences for producers across all soybean-producing regions.
Grain SA will submit detailed comments on the proposal and will continue to advocate for a location differential methodology that is transparent, evidence-based and equitable to all market participants.
ENDS
Media enquiries:
Tobias Doyer, CEO, Grain SA
tobias.doyer@grainsa.co.za
Alzena Gomes, Communication & PR, Grain SA
alzena@grainsa.co.za