Evaluating the Impact of Location Differentials on Soybean Futures in South Africa: Price Dynamics and Silo Re-Deliveries

Daniel Mokatsanyane (), Mariette Geyser and Anmar Pretorius
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Daniel Mokatsanyane: School of Economics and Management Sciences, North West University, Vanderbijlpark 1900, South Africa
Mariette Geyser: School of Economics and Management Sciences, North West University, Potchefstroom 2520, South Africa
Anmar Pretorius: School of Economics and Management Sciences, North West University, Potchefstroom 2520, South Africa

Agriculture, 2025, vol. 15, issue 6, 1-24

Abstract: This study examined the impact of location differentials (LDs) on soybean futures trading in South Africa. This study uses a systematic approach, employing the Autoregressive Moving Average (ARMA) and Generalized Autoregressive Conditional Heteroskedasticity (GARCH) models to analyze relationships between soybean futures prices and LDs. The results suggest that LDs have caused price stabilization for most of the contract months, while the variability and occasional extremes in the spot price increased. Post-LD analysis showed that the volatility was lower, with a normalization of price structures, but, still, regional disparities were driven by transport costs and logistical issues. LDs also affected silo utilization, and the rates of re-delivery differed among regions, reflecting local market dynamics and operational efficiencies. This, in essence, suggests that LDs act to enhance the predictability of markets and price harmonization; LDs also equally require concerted interventions in regional disparities and optimization of market performances. Future studies need to determine the impact that LDs, over a long period, have on market efficiency, regional trade, and general economy-wide indicators like farmers’ incomes and rural development.

Keywords: location differentials; South African futures exchange; soybean futures; grain price risk; comparative analysis; agricultural policy; South Africa (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2025
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