Beef added to commodities trade platform

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The JSE is broadening its agricultural commodities trading platform by allowing buyers of beef to trade in carcasses in order to manage price expectations. This comes as SA grapples with drought, raising fears about the prices of agricultural commodities escalating.

The launch of the beef carcass futures contract should guide buyers such as restaurant owners and retailers to manage future price shifts.

Asked to explain what this meant for an ordinary restaurant owner or retailer, Mr Sturgess said: "If you operate a restaurant and you are buying beef, what you want to do is to protect yourself from the increase in beef prices.

"(For example) if a restaurant owner puts in a beef carcass futures contract now and gets a kilogramme at R40, if the price goes up to R45/kg ... the restaurant owner will get R45/kg to go and buy from an abattoir," Mr Sturgess said.

This means the restaurant owner would have saved about R5/kg by buying into a beef carcass futures contract now.

However, if beef prices fell below R40, the restaurant owner would have overpaid.