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ECX begins soybean trading

ECX begins soybean trading

The decade old Ethiopian Commodity Exchange (ECX) has added soybeans as an additional exclusive trading crop on its electronic floor.
Sources close to the case told Capital that since Friday December 28, 2018 the product has been transported to the ECX warehouse, while as of December 31 the trading of soybeans outside of ECX has been officially stopped by the government.
Sources at ECX told Capital that the product, which is considered an industrial crop was expected to be traded at the ECX floor on Thursday, although that did not occur.
A statement that ECX sent to Capital on Friday January 4 indicated that so far 1,042 quintals of soybeans are being stored at the ECX warehouse.
In its over ten year history ECX has introduced the exclusive electronic trading of coffee, the historical major export earning item, followed by sesame, the second largest hard currency source for the country, and then white pea bean.
The stated three products are exclusively traded at ECX, while soybeans would be the fourth product even though mung bean was expected to become the fourth product sold at the trading facility.
The production of soybean has dramatically increased in the past couple of years. Different surveys indicated that the area covered by the oil bean has increased. Production has risen as well.
A 2014 study undertaken by Mekonnen Hailu and Kaleb Kelemu of the Ethiopian Institute of Agricultural Research found that the total hectare of land under soybean production during the last 10 years (2004-2014) has increased by 10 fold; while the total volume of production during the same period increased by 21 fold.
Experts in the sector told Capital that the production for the current harvest is expected to be high since several areas in the western part of the country have been covered by soybeans. “I have information that in the past rainy season several areas in Welega, Benshangul Gumuz, west Amhara including Metema, which is new to soybean production have been covered by the bean which would expand the production during the current harvest season which commonly begins in October,” an exporter who requested anonymity said.
He supported ECX’s decision to begin trading soybeans. “It would harmonize the price which is different than what we have observed previously,” the exporter who is also a consultant in the oilseeds and pulses sector explained. “During one period last year a quintal of soybeans were 900 birr but the price dramatically increased to 1,700 birr within a month when the number of buyers increased suddenly. The price will stabilize when ECX begins trading as they give a limited percentage up or down floor prices.”
Reports indicated that within seven months in the past budget year the country has exported close to 60,000 metric tons of soybean worth over USD 26 million. Currently the country’s soybean product is estimated to be up to 100,000 tons per annum
India, Vietnam, China, Canada and Pakistan were the major destinations for the crop during the past export season. Experts at the export sector explained that clients of Ethiopian soybeans particularly in India really like the Ethiopian product due to its multiple varieties and non using GMO as opposed to West African countries. “Buyers in India give from ten to 20 USD more prices per ton for Ethiopian soybeans than other west or southern Africa products even though Ethiopia’s product is very limited,” exporters told Capital.
The demand of and production of the bean has increased frequently because it is an industrial product. The trend in Africa has increased in Africa over the past three decades. South Africa is the largest producer of soybean on the continent and followed by Nigeria, Zambia, Zimbabwe and Uganda, while Brazil and US are the leading soybean growers globally.
A year ago Ministry of Trade ordered ECX to undertake the exclusive trading of red kidney bean and mung bean, however it postponed this for an unspecified period because exporters claimed that they need more time for preparation. Recently the ministry sent a letter to ECX to introduce the exclusive trading for mung bean, which is optionally traded on the floor during the last five years, as soon as possible.
The Ministry of Trade and Industry has also approved the optional trading of chickpeas at the trading floor.
In a related development in December the trading floor managed the trading of 78,008 metric tons of items worth 3.8 billion birr. During the stated period 39,240 tons of sesame seeds, 27,773 tons of coffee, and close to 11 thousand tons of white pea beans were traded at ECX. From the total transaction of 3.8 billion birr 40 percent went to coffee trading, while the volume of sesame seeds took the largest share at 51 percent.
The statement that ECX sent indicated that the rate of coffee trading has increased by 36 percent compared with November’s performance. The volume in December, which is considered as one of the peak months on trading because it is the harvest period, has also increased by 29 percent.
The trading of sesame seeds, which has shown a dramatic price increase over the past few months, has improved by 27 and 22 percentages in value and volume respectively. The trading value of white pea beans has increased by half compared with the November performance. The relevant government body claimed that the trading of white pea bean out of ECX or primary markets is occurring. In the past month the Ministry of Trade and Industry (MoTI) has been warning trading actors, mainly exporters that it will take action against those engaged in the trading the bean out of ECX.
The trading volume of white pea beans has also increased significantly compared with the preceding month. The ECX monthly report indicated that the volume has increased by 36 percent.
MoTI has been also warned sesame seeds exporters to stop the under invoice practice on their export. It has been announced that some of the exporters are exported the seeds under the price that they bought from ECX, which affects the country and themselves.

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