According to Reuters, the contract is expected to benefit traders in the country’s two largest palm oil producing states and the exchange of its derivatives. — AFP photo
KUALA LUMPUR (Aug 20): Bursa Malaysia plans to launch East Malaysia crude palm oil contract this October.
According to Reuters, the contract is expected to benefit traders in the country’s two largest palm oil producing states and the exchange of its derivatives.
Bursa Malaysia Derivatives Exchange (BMD) manages the Malaysian Crude Palm Oil Futures Contract (FCPO), which sets the global price benchmark for the cheapest and most widely used edible oil in the world.
Meanwhile, the new contract to be launched, the East Malaysian Crude Palm Oil Futures Contract (FEPO), will provide a greater price advantage to the East Malaysian market, where crude palm oil is usually sold at a discount to current prices in Peninsular Malaysia.
“We are definitely excited about (this contract)… East Malaysian production has already accounted for almost 45 per cent of Malaysia’s total (palm oil) output, even though Peninsular Malaysia’s FCPO is the global price benchmark.
“It will provide more trading opportunities and arbitrages into the market,” said BMD chief executive officer Samuel Ho.
The FEPO contract is similar to the existing palm oil contract, but with a longer trading session and half the position limit.
It will cater for physical deliveries in the East Malaysian states of Sabah and Sarawak through three designated ports.
Malaysia is the world’s second largest palm oil producer and exporter after Indonesia.