Bloomberg News

Zambia Commodities Exchange Expected to Resume Trade in May

April 11, 2012

The Zambia Agricultural Commodities Exchange Ltd. plans to resume trading next month, ending a nine- month halt in which it sought to attract shareholders and asked lawmakers to pass a bill to regulate and boost trading.

The Zambia National Farmers Union, which represents growers, is among those that may invest in the exchange once it has distributed stock to members through demutualization, Executive Director Brian Tembo said. The Lusaka Stock Exchange (LUSEIDX) last year expressed interest in a majority stake while the nation’s newly licensed Bond & Derivatives Exchange, based in Lusaka, is “keen on operating the derivatives side of our market,” he said.

“We are looking at a partner who will bring in trading systems,” with both domestic exchanges being options, Tembo said in an e-mailed response to questions on April 4. Zamace, as the bourse is known, is also checking if South Africa’s JSE Ltd. (JSE) “can extend its systems,” he said.

Zamace, a 15-member bourse set up in 2007, provided a trading platform for grains such as wheat, soybeans and sunflowers as well as cement and fertilizers until it suspended operations in August. The government of Zambia, southern Africa’s biggest corn producer after South Africa and Malawi, is the largest buyer of grain in the country, with the nation’s Food Reserve Agency purchasing 1.8 million metric tons of the 3 million tons produced last year, according to Zamace.

Policy Uncertainty

The agency, originally set up to manage strategic grain reserves, used the exchange to trade 17,761 tons of corn in 2010, or the equivalent of 1.5 percent of the 1.1 million tons of corn it bought that year, Zamace said in a submission to the Zambian Parliamentary Committee on Agriculture in January.

“By drawing significant volume away from the exchange and introducing a high degree of policy-related uncertainty into food markets, the potential for Zamace to foster beneficial changes in Zambia’s food markets is limited,” it said. In the last three marketing seasons, the government has maintained the FRA purchase price of corn at 1.3 million kwacha ($247) a ton. “Current FRA sale prices are between $135 and $170 a ton, depending on location,” Zamace said. “This buy-high and sell- low approach is clearly distortive.”

The Cabinet in 2010 asked the Securities and Exchange commission to draft a Commodities Exchange Bill that would would regulate Zamace’s operations, bolstering trust. The bill is expected to be presented in either June or July for enactment, allowing Zamace to regulate itself, Tembo said.

Corn is known as maize in southern Africa.

Corn Prices

“An exchange can only develop in a particular environment and an environment of import or export bans and active state participation, for instance, in marketing of maize is not conducive for growth,” Tembo said.

South African white corn for July delivery, the most active contract, fell for the first time in seven days, losing 0.5 percent to 2,300 rand ($286) by 10:30 a.m. in Johannesburg.

On the Chicago Board of Trade, corn futures for May delivery rose for the first time in three days, adding 0.2 percent to $6.3625 a bushel.

To contact the reporter on this story: Tshepiso Mokhema in Johannesburg at

To contact the editor responsible for this story: Antony Sguazzin at

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