Agricultural commodity derivatives were first introduced in South Africa in 1996 after the deregulation of the former marketing system. In the context of its proposed functions, namely price discovery and risk management, the question arose as to whether the futures market developed over time to performed its role efficiently. According to the Efficient Markets Hypothesis (EMH) an efficient market is one that accurately incorporates all information available at any point in time. The purpose of the research was to address the issue of price discovery efficiency, firstly, focusing on the weak-form methodology. Secondly, considering the behaviour of futures prices over time, the study addressed the concern of anomalies in daily returns – phenomena contradictory to the EMH by implication. Thirdly, as a means of defining the sources of inefficiency, the role of scheduled public information and its impact on futures prices was examined. Therefore, the primary objective of the research was to investigate and identify the main components of agricultural futures market inefficiency within the unique price formation structure of South African grain markets. The assessment of this problem is important in terms of evaluating the growth and development of the futures market for different grain commodities to date. The Exchange needs to review rules and regulations on a frequent basis in order to ensure proper functioning at all times especially in the case of a relatively new and fast growing market. The study contributed to the knowledge of understanding the price adjustment process and its implications for market efficiency in the context of the three grain markets considered. The weak-form efficiency was tested using a co-integration based model. Analysing daily spot and futures prices of white maize, yellow maize, and wheat, results indicated that all three markets were efficient and unbiased. Non-parametric tests revealed the significant presence of day-of-the-week and turn-of-the-month effects in the futures returns of the three commodities. Further non-parametric analyses suggested a high degree of uncertainty in futures returns around scheduled agricultural and macroeconomic information release dates also contributing significantly to the identified anomalies. It was concluded that (1) the markets’ ability to anticipate the contents of future information to be released, (2) the current skewed size distribution of broking members, (3) the significant role of the R/$ exchange rate in the price formation process of South African grains and, therefore, (4) the relationship to and influence of the broader economy enhanced the return effects (anomalies) creating opportunity for profitable arbitrage. This conclusion was mainly attributed to South Africa’s status as a price-taker in the world grain complex as well as the relatively short existence of the local agricultural futures markets.

The commercial harvesting of Phragmites australis reeds in the Tembe Elephant Park, Maputaland, KwaZulu-Natal was investigated to determine the impact of reed use on the Muzi Swamp. The reed quality in the harvesting areas within the Tembe Elephant Park has deteriorated over time, with the reeds in the harvested areas being by and large shorter and thinner than the reeds in the other areas of the reserve where harvesting is not allowed. The impact of continuous harvesting in combination with the accidental burning of certain areas in the Muzi Swamp was also found to be detrimental to reed production when compared to other treatments. Poor rural communities neighbouring the Tembe Elephant Park are dependant on the reed resource for both income supplementation and for use in the construction of dwellings. Reeds offer a cheaper alternative to the more western building materials, which is of utmost importance in an area where the mean yearly income is around ZAR 6000 per annum. The manufacture of prefabricated reed and forest timber huts by the local reed harvesters in the summer months would facilitate a winter only harvest, which is more beneficial and is integral to the improvement of the long-term reed quality in the Muzi Swamp. In addition, the cost of these proposed prefabricated reed and forest timber huts is approximately one third of the cost of a similar sized hut that is constructed from bricks and cement. Management recommendations for the controlled harvesting area in Muzi Swamp of the Tembe Elephant Park, as well as the section of the Muzi Swamp that is not afforded protection by Ezemvelo KwaZulu-Natal Wildlife, are also presented. / Dissertation (MSc (Wildlife Management))--University of Pretoria, 2007. / Centre for Wildlife Management / unrestricted