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Bringing an end to its extended formation process,
the Ethiopia Commodity Exchange (ECX) finally
commenced operations last week on March 24. The
Ethiopian Grain Trading Enterprise and Seid Yasin
Export Plc were pioneers in the trade of white
maize, operating as seller and buyer respectively.
In a press conference held on the same day at the
Exchange's Headquarters at Alsam Tower, Eleni Z.
Gabremedhin (PhD), CEO of the Exchange, disclosed
that the ECX initially launched its operations with
the live trading of maize and haricot beans at least
once a week.
The Exchange started live trading with 41 contracts
of white maize and haricot beans, which amounted to
2,050 quintals. Out of these contracts (where a
contract refers to 50 quintals standard lots), 37
quintals were of white maize. Grade two and three
grains are expected to be traded in the ensuing
bids.
The trading activity took place at the exchange
trading floor where members, or their
representatives, were of present on the basis of
standardized contracts which specified commodities
by grade and class.
Settlement is completed on the same trading day, by
using a secure electronic gateway with its
settlement banks. Similarly, title transfers of
warehouse receipts and issuance of delivery notices
to buyers are done electronically.
"There were more buyers than sellers today," said
Eleni. "The buyers present in the launch of the
trading floor were agro-processing and export
companies and ECX expects more of them in the
following days."
ECX will continue to conduct outcry trading floors
every Wednesday, once a week, to begin with and the
ensuing frequency will depend on the demand and
supply of the market.
The opening price for white maize was 325 Br and if
was closed at 334 Br and the haricot beans opened
and closed at 560Br.
What determined the price was the demand and supply
of the market factors, like any free market practice
and ECX's role in the trading was just ensuring
price discovery matched demand and supply.
ECX has, at present, a warehouse at Akaki, and plans
to add more in different regions. It is set to
receive Seasam and wheat in its warehouse. The
exchange has planned to reach about 10pc of the
market in the first few years.
"The ECX represents a new era for Ethiopia's
agricultural marketing. It brings fairness and
efficiency and levels the playing field for small
holder farms," Mekonnen Manyazewal, chairman of the
ECX Board and State for Finance and Economic
Development (MoFED) is quoted as saying in a press
release issued by the exchange on March 24.
In the present situation of the country, only
30-32pc of the grain market channels directly
reaches buyers from sellers, which could be a
challenge to ECX's operation.
To constantly update stakeholders about the price,
ECX has planned to distribute digital billboards
that display price of the day in major grain market
areas of Addis Abeba. In regions, it has planned to
utilize woreda nets (a program that is expected to
start soon by the Ethiopian Information
Communication Technology Development Agency) that
can serve 200 woredas.
Besides, a massive promotions campaign is expected
to be made intensive and continual soon.
"This will enable traders far away to learn about
price information, they can refer to ours," says
Eleni.
Commodity exchanges, first created in Chicago,
United States, in 1948, provide a centralized
trading venue for member businesspeople. They also
disseminate market information instantly, collecting
statistics, publishing price quotations and setting
rules and standards for trading.
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