Our Activities

Unlocking Efficiency For Agribusiness

Farmwise Grains (Pty) Ltd. also believes in sharing the benefit of our experience and insight in the form of market knowledge with our clients to ensure that everybody is up to date with the latest market trends both fundamental and technical as well as up to the minute pricing movements.

  • Daily Market reports on all main commodities to enable our clients to make the correct decisions.
  • Live market prices available on your own computer or cell phone from our futures trading partner F-Wise Capital.
  • Guidance as to appropriate strategies taking into account our client specific needs and business environment.
  • We trade grain in a way that suits the client best, within the opportunities offered by the market. The producer has the opportunity to plan ahead and decide before harvest time which marketing channel offers the most favourable profits.
  • We have an effective administration system that is constantly updated to remain ahead of the challenges of the changing environment.
  • Logistics management
  • We build long term strategic partnerships with producers to enhance competitive basis price development strategies.

In the commodity trading model, Farmwise purchases or sells a commodity to be transported or stored and hedge the resulting commodity position via a derivatives transaction until the physical position is unwound by the sale or purchase of the original position.

We hereby transform the exposure to the commodity’s flat price into an exposure to the basis between the price of the commodity and the price of the hedging instrument and the location of the delivery contract to the benefit of all our clients.

Commodity prices can be very volatile, and indeed, can be subject to bouts of extreme volatility. Therefore, role players such as farmers and processors with flat price exposure can suffer large losses or make large profits. We try and guide our clients in such a way that they have limited downside risks and reasonable potential upside benefits.

We do this by using the following:

  • Price matched order execution the producer can lock in a basis only price, with the market price being fixed later for deliveries during a future month or even well after delivery.
  • Deferred pricing models, minimum price contracts, fixed price and option combinations are all part of our everyday business and we deploy the strategy most suited to the needs of the client.
  • Production pace matched pricing plan

In theory, it is possible for farmers and processors to find a counterparty who would be willing, at some price, to enter into a contract that closely matches the sales or procurement needs of that farmer or processor every day that either of them wants to enter into a contract.

However, it can be time consuming and expensive to find such a person every day. Farmwise, using the futures market, acts as the counterparty for these buyers and sellers on a daily basis. This means that the Farmer and Processor with diametrically opposed pricing needs does not have to face each other in an adversarial position until their needs coincide.

Moreover, should it become needed for one of the parties to exit such a contract, Farmwise can accommodate both parties, without prejudicing the one or the other.

We do this by using the following:

  • Deferred pricing contract with no pay-out or partial pay-out. When the price is just not right at the time of delivery the farmer can roll his pricing month forward to a future month to allow the price to be determined at later stage. The producer has the option to take a percentage partial payment (risk profile dependent), with the balance being paid once pricing is finalised.
  • All price component fixed pricing in when the crop is in the bag.
  • Minimum price contract: This product gives the producer the opportunity to secure a minimum price without the risk of non-delivery by paying a premium for a put option.
  • Deferred, price component fixing, as risks decline and crops are more certain.
  • Combined fixed price and option derived pricing structures for different risk profiles.

Although the basis tends to be less variable than the directional price risk, basis can be volatile and subject to large movements, thereby potentially imposing large costs on processors. Basis risks generally arise from changes in the economics of transformation during the commodity cycle, and changes in transportation, storage, and interest cost can affect delivered prices across locations. Sometimes these basis changes can be extreme and it is these extremes that we aim to limit and contain where and when possible.

We do this by using the following:

  • Contract execution is supported by an effective administration & logistics system ensuring that all info is as live as possible.
  • Securing grain for end users at the optimal locations and at a competitive basis price. Pricing strategies and stock management are being done for a variety of clients and we pride ourselves that we can deliver as the client requires.
  • Origination of agricultural commodities from farmer client’s best suited to processing requirements. We continuously supply raw materials across the country and this makes us very responsive to the needs of many clients.

We do this by using the following:

  • Farmwise Grains (Pty) Ltd is one of the foremost, independently owned, agri-trading enterprises in Southern Africa and we’ve completed every contract we’ve entered into.
  • We have excellent relationships with all the main financiers in the agri commodity space and can confidently say we don’t miss a payment date.