NEWS & VIEWS • MARCH 2026 3 Exchange-rate forecasts for 2026 indicate volatility but a likely stabilisation around R16.00–R16.50/ USD. It seems likely gradually to push towards R17/USD beyond that. This range now forms a crucial part of NCT’s planning and pricing models. NCT competes directly with suppliers from Australia, Vietnam, and Latin America. The strength of the rand erodes our global competitiveness, and with markets under stress, some of our competitors have already adjusted wood chip prices downward — reducing the scope for recovery through a potential USD price increase. Australian companies lost substantial market share in the past two years by adopting a stance that made them uncompetitive, but they have now adjusted their approach. Facing the current market and FX scenarios, NCT must consider the cost of members’ timber and identify what the Co-operative can reasonably afford to pay while preserving a sustainable business model. This will lead to a reduction in log prices across all species, a decision communicated to members prior to this publication. Although NCT must reduce Mill Delivered Prices (MDPs) in the current environment, our commitment remains clear: when conditions improve — whether through a weaker rand, stronger demand, or higher USD chip prices — NCT will prioritise recovering these prices for members. The broader strategic effect on NCT into 2026 and beyond What members should take away People often say NCT must adopt a business model that is independent of the impact of the exchange rate. The exchange rate is not only a macroeconomic indicator – it is a direct determinant of grower income. As we move into 2026, the rand remains stronger than recent years, compressing export revenues; domestic costs continue to rise independently of FX; USD chip pricing is constrained by weak Asian pulp and paper markets and competitor concessions; and NCT’s responsibility is to remain sustainable, equitable, and competitive – even when market conditions tighten sharply. Some argue that NCT should operate independently of exchange-rate impacts or use a business model that is not sensitive to exchange-rate impacts but for an exporter, is a core part of the business model. What we can do is deliberately build FX volatility into our strategic and operational decisions to protect the Co-operative through both strong-rand and weak-rand cycles. That said, what NCT must further do is continue to adapt our strategic and operational decisions around competitiveness, diversification and tactical positioning in readiness for the next economic up cycle. Despite current pressures, NCT remains committed to its members: when the environment improves, the Co-operative will move swiftly to restore MDPs and return value to growers. With prudent management and unity across the value chain, the Co-operative will navigate these conditions and be ready to capitalise on them. Managing FX Risk: How NCT navigates uncertainty To protect the Co-operative and its membership base, NCT continues to employ a balanced approach. We use long-term customer relationships and contract structures; conservative capital expenditure plans; and we strive to ensure optimum operational efficiencies on farms, depots and mills. We also continuously monitor economic trends and commentary by global analysts, their models and analyse endless risk scenarios. We use a conservative hedging strategy that allows us to participate if the rand weakens but allows us to protect our carefully structured budget levels as the rand strengthens. This strategy has gone a long way in cushioning the rapid strengthening of the rand this time around.
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