South Africa’s JSE Starts Diesel Hedge Contracts as Price SurgesTshepiso Mokhema
JSE Ltd., which manages South Africa’s futures exchange, has introduced contracts that allow investors to protect against changes in diesel prices that were raised to a record today.
The diesel-hedge contracts started trading on Feb. 20, JSE Commodities Derivatives Director Chris Sturgess said.
“Anyone who is in the logistics business will be the biggest user,” Sturgess said on the sidelines of a conference in the Free State province town of Bothaville, about 210 kilometers (131 miles) southwest of Johannesburg. “We are talking from farmers to mining companies.”
The Department of Energy increased the price of diesel in Gauteng province by 2.1 percent to a record 13.39 rand ($1.25) a liter for March starting today after the average rand-dollar exchange rate declined in February from a month earlier.
The rand slumped to the weakest level since October 2008 against the dollar on Jan. 30. Africa’s biggest economy imports about 70 percent of its oil needs, processing the remainder of its fuels from coal and gas.
One contract is for 5,000 liters (1,319 gallons), and prices are quoted in rand per liter, the JSE said in a presentation on its website. Rand Merchant Bank, the investment-banking unit of FirstRand Ltd., South Africa’s second-largest lender, acted as the first market maker, it said.
Diesel and fertilizers are the two biggest costs for farmers, said Jannie de Villiers, the chief executive officer of Grain SA, the biggest representative of commercial farmers in South Africa.
“Farmers need to embrace it and they need to understand how it works and try to make use of it to hedge their costs,” he told reporters, referring to the diesel contract.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.
- Uber Halts Autonomous Car Tests After Fatal Crash in Arizona
- Apple Is Secretly Developing Its Own Screens for the First Time
- Stocks Slump as Facebook Hits Tech; Bonds Recover: Markets Wrap
- From a $126 Million Bonus to Jail: The Fall of a Star Trader
- Facebook Plunges as Pressure Mounts on Zuckerberg Over Data