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ZMX to introduce cross-border trading

THE Zimbabwe Mercantile Exchange (ZMX) would this year introduce a host of initiatives including cross-border trading of commodities to enable participants access to a broader range of grains and oilseeds.

ZMX is an electronic agricultural commodity platform launched in August 2021 and one of the exchange’s key objectives is to provide an open market for commodities with willing buyers and willing sellers providing price discovery mechanisms.

Since its formation, the agricultural commodities exchange has been introducing new crops like soya beans, sugar beans, sunflower, white sorghum, red sorghum and wheat for trading under the weekly auction that began with maize only.

The diversification of crops has also been touted as an encouragement for farmers to explore new opportunities in the agricultural industry.

The ZMX initiative is a partnership between the Government and the private sector led by FINSEC, TSL Limited and CBZ Holdings with FINSEC undertaking the technical implementation of setting up the bourse.

Farmer unions such as the Zimbabwe Farmers Union (ZFU) and Commercial Farmers Union (CFU) have thrown their weight behind the initiative through promoting ZMX to their members.

In its latest weekly commodities price report, ZMX general manager Mr Garikayi Munema said looking ahead to 2024, the commodities exchange is poised for further growth and expansion.

“We are delighted to announce that we are working on a number of initiatives such as cross border trading, this will enable participants to access a wider range of grains and oilseeds and diversify their supply sources. “Importers, traders, and end-users can expect a streamlined and efficient process, ensuring a reliable and stable grain market.

“In line with our vision of regional integration, the ZMX will facilitate cross-border trading of commodities,” he stated.

Mr Munema said this initiative will connect Zimbabwean traders with regional markets, fostering economic cooperation and expanding market access.

And by strengthening regional trade relationships, the commodities exchange aims to enhance food security and drive economic growth.

In recognition of the immense potential of Zimbabwe’s horticulture and livestock sectors, ZMX intends to introduce dedicated platforms for horticulture and livestock trading on the platform.

“These additions will provide specialised marketplaces for buying and selling a wide array of high-quality horticultural products and livestock.

“By creating robust trading ecosystems, we aim to stimulate growth, increase market opportunities, and maximise value for farmers and traders,” he said.

Meanwhile, the average market price for maize on ZMX is US$360 per tonne higher the import parity range of US$286 to US$326.

This, ZMX said, indicates that maize is relatively more expensive in the domestic market compared to the price at which it could be imported.

On soya, the commodities exchange said the average market price is US$535 a tonne.

“This price is within the import parity range of US$540 to US$580, indicating that the current market price is lower than the higher end of the import parity range.

“It implies that soya is relatively more affordable in the domestic market compared to the price at which it could be imported,” said ZMX.

It said the average market price for wheat is US$400 per tonne and this price is within the import parity range of US$403 to US$443, suggesting that the current market price is lower than the higher end of the import parity range.

“It indicates that wheat is relatively more affordable in the domestic market compared to the price at which it could be imported.

“Based on the above analysis, we can see that soya and wheat have market prices lower than the higher end of their respective import parity ranges.

“This implies that these commodities are relatively more affordable in the domestic market compared to their potential import prices,” it said.

“On the other hand, maize has a market price higher than the lower end of its import parity range, indicating that it is relatively more expensive in the domestic market compared to its potential import price.

The comparison between market prices and import parity ranges provides valuable insights for traders, policymakers, and consumers.

“A market price below the import parity range suggests that importing the commodity may not be economically viable as the domestic market price is more favourable.

“Conversely, a market price above the import parity range indicates the potential for cost savings through imports.

“For the remaining commodities listed, including ground nuts, round nuts, rapoko, cow peas, millet, and sugar beans, their prices have remained constant without any significant changes,” it added.

Herald

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