Grain SA in a statement indicated disappointment by the decision by the Johannesburg Stock Exchange (JSE) not to retain the Multiple Reference Point (MRP) model for calculating soybean location differentials.
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Grain SA has expressed disappointment over the Johannesburg Stock Exchange's (JSE) decision to abandon the Multiple Reference Point (MRP) model for calculating soybean location differentials, arguing that the move ignores years of research and risks disadvantaging producers already facing mounting financial pressure.
The agricultural body said the JSE's decision to revert to a single reference point system failed to adequately explain why the MRP model did not meet the exchange's own evaluation criteria after a two-year pilot.
However, the JSE said it had carefully considered submissions from market participants before deciding to return to the existing methodology.
According to the exchange, the review identified "structural and operational limitations" that undermined confidence in the MRP model, including difficulties in sourcing accurate and auditable soybean crushing data.
It also said stakeholder feedback showed that the MRP methodology was not regarded as sufficiently simple, clear or practical by all participants.
“After a careful and thorough consideration of all the facts and information at the disposal of the JSE, including the considerations briefly summarised above and with due regard to its functions and responsibilities as a licensed exchange, the JSE decided to revert to a single reference point model in the calculation of the Location Differential of listed futures contracts.”
Grain SA, however, said the MRP model was developed following the JSE's own call for industry participants to propose alternatives to the existing pricing system, which it believes does not accurately reflect regional differences in soybean demand.
The organisation said it worked alongside independent scientists and technical specialists to develop the model, which was piloted on the soybean futures contract over two marketing seasons.
According to Grain SA, the pilot was intended to be assessed against five agreed criteria, including trading volumes, market participation, stock management in zero-differential areas, the redelivery of JSE silo receipts, and stakeholder feedback.
The organisation questioned whether the recommendations of the technical committee established to assess the pilot were adequately reflected in the JSE's final decision.
“We are concerned that the JSE’s final decision and motivation do not provide sufficient and transparent, criterion-by-criterion reasoning against the agreed evaluation framework,” GrainSA said.
The organisation also argued that the exchange placed too much emphasis on challenges surrounding soybean crushing data without fully considering the model's overall performance.
Grain SA said the concentration of soybean processing facilities has created information asymmetry, with key market information remaining in the hands of a limited number of industry participants.
It believes data collected under the Marketing of Agricultural Products Act could be made available in an aggregated and confidential format to improve the calculation of soybean location differentials.
“Both historical and current information could be accessed, in an appropriately aggregated and confidential form, to support a more comprehensive assessment,” it said.
Grain SA said that 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.
“We 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.”
Grain SA added that 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.”
The farming body that Market participants have been invited to comment on this proposal by 14 August 2026.
“They 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."
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