Joy for farmers as ZMX maize auction price jumps 9,6pc
THE price of a tonne of maize on the newly introduced maize commodities auction system run by the Zimbabwe Mercantile Exchange (ZMX), rose by 9,6 percent to US$285 last week, up from US$260 a week earlier.
The auction is conducted online once every week.
Running for the second consecutive week, the maize auction also saw volumes traded increase to 105 tonnes from 93 tonnes.
ZMX is expected to provide a platform for buyers and sellers. It will also promote market integration and opportunities for participants.
The auction is in accordance with the ZMX trading rules that were gazetted in Statutory Instrument 184 of 2021.
It is envisaged that more commodities will be auctioned on the exchange.
Financial Securities Exchange chief executive officer Collen Tapfumaneyi, whose company runs ZMX, was satisfied with the level of participation of both large and small players.
“It’s great to see an increase in the volume of commodities being traded. It gives us confidence that the auction concept is gaining familiarity among participants.
“This bodes well for the future, as we can expect to see higher trading volumes and a more liquid market,” said Tapfumaneyi.
As more buyers and sellers become acquainted with the benefits of the auction, he added, they expect the number of participants to gradually increase.
“Additionally, as the range of commodities offered on the auction platform widens, we can expect to see increased interest from a broader range of market participants.”
Market experts say the auction provides farmers with an opportunity to sell their grain directly to different market players.
Dr Reneth Mano, an agribusiness development practitioner, said the prices prevailing on the ZMX auction are competitive to the landing price of maize from South Africa.
“South African maize would land in Bulawayo and Harare at US$265 and US$290 per tonne, respectively, based on June and July South African Futures Exchange futures and current spot prices,” he said.
A commodity market is seen as the right platform for establishing transparent and fair prices for maize.
According to experts, a well-functioning commodity market can enhance market efficiency by improving liquidity, reducing transaction costs and fostering competition.
This can lead to better allocation of resources.
Dr Mano believes stockfeed and commercial livestock companies are the major buyers because local wholesale and retail prices are structured to reflect prevailing domestic grain market prices.
“From April 2022 to May 2023, the stockfeed industry was importing a large portion of its monthly maize requirements following the strategic decision by Government to preserve most of the Strategic Grain Reserves stocks at the Grain Marketing Board.
Dr Mano added: “There is currently no importation of maize by the stockfeed industry nor by the roller meal manufacturers because the domestic market is awash with maize at competitive prices.”
Meanwhile, the GMB floor producer price is US$335 per tonne of maize, with US$200 in foreign currency plus US$135 in the local currency, at the interbank rate.
The GMB will be selling maize to millers at US$368 per tonne, paid as US$200 in foreign currency plus US$168 in the local currency, at the interbank rate.
-ebusinesswekly
