South African soybean farmers could face nearly R700 million ($43.4 million) in additional costs under a proposed change to how the Johannesburg Stock Exchange calculates location differentials for soybean futures, according to industry body Grain SA.

The dispute centers on the JSE’s decision to return to a single reference point for soybean pricing and physical delivery. Grain SA says the approach could increase transport-related deductions from farmers’ prices and add costs across the agricultural value chain.

The organisation estimates that the difference between its proposed multi-reference-point model and the JSE’s single-reference-point system could amount to about R696 million($43.14 million) across relevant soybean volumes and silo points.

Grain SA says the issue is not simply a technical disagreement, but one that could affect farmers, processors and ultimately consumers. Grain SA has challenged the JSE’s decision through an interdict application after the exchange announced its plans in July. The JSE has opposed the application. Earlier this month, Grain SA also led a march to the JSE and handed over a petition signed by 965 supporters calling for the exchange to reconsider its decision.

Why the soybean pricing system matters

The JSE has traditionally used Randfontein as the single reference point for calculating location differentials across registered soybean silos. For the marketing season starting March 1, 2027, the exchange has proposed replacing Randfontein with Driefontein and invited market participants to submit comments by Aug. 14.

Grain SA instead supports a multiple-reference-point model, arguing that soybean prices should better reflect where the crop is produced, where demand exists and how grain actually moves to processors and buyers.

Under its proposed system, the average transport deduction would be about R113($7) per ton, compared with R333($20.64 ) per ton under the single-reference-point model. That represents a difference of R220($13.63) per ton, which Grain SA estimates could translate into almost $43.4 million across the market.

Farmers face higher deductions

For farmers, higher location differentials can mean larger deductions from the cash price received for soybeans. Grain SA CEO Tobias Doyer said an efficient agricultural market needs credible price discovery and pricing methods that reflect actual supply, demand and transport routes.

“A farmer already operating under tight margins cannot simply absorb hundreds of rand per ton in additional deductions,” Doyer said.

Grain SA pushes for transparency

Grain SA says the JSE’s final decision did not provide enough criterion-by-criterion reasoning against the agreed evaluation framework.

It argues that a decision with potentially significant financial consequences for producers and the wider value chain requires greater transparency.

Grain SA represents South Africa’s grain producers and works on issues affecting the sustainability, competitiveness and profitability of the grain industry.

The organisation said it will continue pursuing available processes to protect producer interests and promote what it considers a fair, transparent and efficient agricultural derivatives market.