ECX opens local window for soybean

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The Ethiopian Commodity Exchange (ECX), an electronic commodity trading floor, opened a special trading window for local processers, who use soybean as an input, and will add two more commodities under its exclusive trading scheme.
The special window is targeting to ban local producers to access the product from primary market.
Since January 2019 soybean, which is considered an industrial product, is trading at ECX exclusively. However, local processors, who use the product as raw material for their industrial production, have been allowed to access the bean from primary market or directly.
Misganu Arega (Amb), State Minister of Trade and Industry (MoTI), said that processor can now only buy the product at the special window at ECX. He said that the new initiative introduced as part of the way to harmonize the soybean trading and cut challenges in the sector.
“To improve the supply, and harmonize the bean local price to the international market that help to get more revenue from export the market mismatch should be corrected,” Misganu said.
Netsanet Tesfaye, Public Relations Head at ECX, told Capital that the commodity exchange is working to introduce the special trading. “ECX is finalizing preconditions in collaboration with MoTI to commence the trading and we hope it will commence soon,” he added.
He said that on the break that allowed local processors to access the product from primary market some of them abused the opportunity. “Some processors sold the bean for exporters illegally,” he added. “It has created a gap for contraband.”
“The new initiative that creates regulated price will solve such kind of mischiefs,” the State Minister said.
The ministry has also given grace period for soybean hoarders to come up with the product in a given period.
The State Minister called those, who illegally stored the bean to supply the product at the ECX warehouse via suppliers until September 5, before legal action is taken by the government.
In related development MoTI has announced that exporters of sesame seeds, white pea bean, mung bean and red kidney bean should come at the ministry between August 10 to 28 for stock balance.
New products
The exchange has also stated that that it will add red speckled beans/pinto beans and white pigeon pea, which are mostly export oriented products.
Netsanet told Capital that the new products trading will be introduced as of the coming Ethiopian New Year, which is September 11. The coming of the two products will increase the commodity exclusively traded at ECX to seven.
According to Netsanet under red speckled bean also known as pinto bean, there are six varieties, red white, white red, white gray, creamy red, un-speckled creamy and un-speckled yellow.
A survey conducted by ECX indicated that the production of the beans is over 435,600 quintal per annum out of which 30 percent is consumed locally.
“Based on the 2017/18 year data the products were mainly exported to India, Kenya, Pakistan, Tanzania, German, Russia and Czech Republic,” Netsanet said. He added that the beans expert has sharply spiked in the past year. He referred the performance of the 2017/18 and 2018/19 that was 2,984 metric ton two years ago that boosted to 7,801 metric tons in 2018/19 budget year that generated USD 468,066.
The local market average price is 1,336 birr per quintal and average fob price is 1,950 birr.
Red speckled beans/pinto beans is mainly produced in Sidama region and Gurage, Gedio, Burji areas in SNNP region.
Netsanet said that the product will be expanding in different regions since there is a potential in suitable areas for the harvest that preferred low land areas.
White pigeon pea is the other pulse that will be exclusively traded at the electronic trading floor as of September.
The public relation head at ECX indicated that the pulse is widely harvested in the country in more than four regions. The country agro ecology is very suitable for the production, while the local consumption is very small that is estimated about ten percent from total production and the balance for export, according the Netsanet.
“White pigeon pea major production area are South and North Gonder and South Wello at the north the product is produced in, at Welayta, Gamo, Gofa, Segen, Dawro, and South Omo in the south, in Qelem Welega, West Welega, East Welega, Horo Guduro, Iluababora and Jima in the west; in Bulen, Pawe, Dibate, Dangua, Manduara, Guba, Werkmeda, Wenbera, Jawi and Fendiqa areas in north west, and East Shoa, Arisi, Harar, West Arsi, and North Shoa at the central part of Ethiopia,” the Public Relation Head said.
India, Kenya, Italy, Portugal, and Belgium are major export destinations.
Netsanet indicated that the annual production of white pigeon pea is 396,000 quintal that has 20 percent annual growth in the past few years.
“Since the trading commence at ECX the production is expected to hike because farmers and suppliers will get the market information,” he said.
“In 2016 the country has earned USD 1.2 million from export of 15,656 quintal, which has high value, due to that the production is expected to increase,” he added.
Minister of Trade and Industry stated that the two products have a potential to earn significant amount of hard currency. It is stated that it has given three months grace period for suppliers and exporters to conclude their contracts and stocks until October 11.
The ECX has finalized to receive the products in its branches located throughout the country.