World’s biggest palm oil exchange to launch soyoil futures
BURSA Malaysia Derivatives Exchange (BMD), the world’s leading exchange for crude palm oil futures, will launch a soyoil futures contract on Mar 18 to facilitate arbitrage between soyoil and palm oil contracts, its chairperson said at an industry conference on Tuesday (Mar 5).
This would be the first non-palm based edible oil futures to be listed on Malaysia Bursa Derivatives, said Abdul Wahid Omar, after an agreement with Dalian Commodity Exchange (DCE).
“Soyoil contract will enable market participants to seamlessly arbitrage between soybean oil and palm oil prices on the same platform,” he said.
The BMD will use the settlement price of the soyoil futures contract on the DCE as the basis for calculating the settlement price for its new US dollar-denominated soyoil futures, he added.
Price movements in palm oil, soyoil, sunflower oil and rapeseed oil depend on the price trends of other competing edible oils.
Currently, traders and refiners hedge their risk in various edible oils on different exchange platforms.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Currently, Chicago Mercantile Exchange (CME Group), which merged with the Chicago Board of Trade (CBOT), offers one of the most liquid soyoil futures contract that is used by the industry as a benchmark.
The BMD’s new soyoil contract appears attractive, but it may not be easy for BMD to garner large participation due to the already very active existing soyoil contracts offered by CBOT and DCE, said a Mumbai-based dealer with a global trade house.
“The new contract needs to bring a lot of participation and liquidity, which will eventually attract more people to trade the contract,” the dealer said.
Meanwhile, Omar also said Malaysian palm oil prices are expected to improve in 2024, helped by heightened demand from key markets, but warned that market participants should remain vigilant of possible challenges. REUTERS
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Companies & Markets
BlackRock, Citadel reap billion-dollar deals from Australia fund
Credit Suisse faces 50 billion won South Korea short-sale fine
Nvidia supplier SK Hynix says HBM chips almost sold out for 2025
Jim Beam owner bets on canned vodka cocktails to double revenue
Hot stock: Nio climbs about 19.8% on stronger vehicle delivery performance
Cutting the cord?: Events leading up to Cordlife’s MOH suspension and arrests of its directors, ex-group CEO