Bloomberg
Competition authorities have found no proof to support a complaint that the SA Futures Exchange (Safex) is fixing physical grain prices by the way it calculates transport costs.
The Competition Commission “could not find evidence of a concerted practice between the respondents to indirectly fix the price of wheat through the location differential in the physical wheat market”, the watchdog said in an e-mailed response to questions on Monday. The conduct “is an appreciation of the market conditions and the link between the futures and cash markets”.
The complainant, who was not identified, had alleged that there was a “concerted practice” to fix transport costs in the physical grain market by using the town of Randfontein as a single reference point to calculate the costs, the commission said on March 16.
Safex, which is managed by bourse operator JSE Limited, applies so-called location differentials to maize, sunflower seed and wheat contracts to help reflect the cost of moving stock from registered silos around the country.
The traded price of the commodities is referred to as a Randfontein price, and the amount the purchaser pays is reduced by an estimate of how much it costs to transport the grain to Randfontein from the silo the buyer was allocated, according to the JSE.
Randfontein is a Gauteng town located 45km west of Johannesburg.
The JSE’s agricultural advisory committee said last year that doing away with the location-differential system could raise risk in the market. The JSE increased the price differential used to indicate the cost of transporting maize to silos by an average 8.5 percent for the year starting on May 1, it said on April 26.