Malaysia to consider dollar-based palm oil contract
Star - [Thursday - September 21, 2006]
Bursa Malaysia to consider dollar-based palm oil contract
Malaysia is considering launching a dollar-denominated palm oil
futures contract as early as next year to head off potential
competition from a rival backed by the Chicago Board of Trade (CBOT),
a senior exchange official said yesterday. The exchange will act to
protect its leading position in crude palm oil futures, which is
increasingly attracting attention from hedge funds as well as
producers in neighbouring Indonesia. A joint venture between CBOT
and the Singapore Exchange, called the Joint Asian Derivatives
Exchange plans to offer palm oil futures around the end of the year.
Its first futures contract, rubber, launches on Sept 25.
The new contracts, if sufficiently popular, could draw liquidity
away from Asia's current rubber contracts in Tokyo and Singapore,
and from the palm oil contract in Malaysia. “There's nothing much
you can do about competition except fight back,” Raghbir Singh Bhart,
head of global markets for Bursa, told Reuters in an interview.
“We are actively looking at whether Bursa should offer a US-dollar
denominated contract. The central bank has been very supportive,
saying, 'yup, you guys can go ahead'. So now the ball is basically
at our feet, as to when we are going to introduce it.” The contract
could be introduced next year, he said. The exchange's current palm
oil contract is dominated in ringgit.
Previous experiments with dollar-denominated tin and palm olein
futures failed to take off. That had been at exchanges that preceded
Bursa Malaysia, a merger between the KLSE and the country's
commodity exchanges. The exchange is also considering adding
delivery points in Indonesia, which would also facilitate trading by
the growing number of Indonesians trading the Malaysian contract.
Their increased interest in part stemmed from greater ties with
Malaysian plantations, which insisted their Indonesian counterparts
hedged exposure, Bhart said. “They are obviously looking at
Indonesians, so one way to head them off at the pass is to have
Indonesian delivery points.”
After years in the doldrums, palm oil futures are now generating
increasing interest as Governments pursue plans to use palm oil for
fuel. Bursa was also studying biodiesel futures, but unlikely to
launch them in the immediate future, since most biodiesel plants
were still seeking approvals or under construction, Bhart said.
“Its certainly on our radar screen.” –
Palm Oil Council)
- Business Times - [Thursday -
September 21, 2006]
Crude palm oil
Crude palm oil futures prices on Bursa Malaysia
Derivatives Bhd closed lower yesterday following a decline in soya
oil and crude oil prices, a dealer said. He said the export
figures for the first 20 days for September had also failed to rally
the market. Cargo surveyor, Intertek Testing Services, said exports
rose to 856,999 tonnes from an estimated 856,885 tonnes.
Palm oil and soya bean oil compete for similar export destinations
with respective prices always moving in tandem. The dealer also
expected the market’s immediate support level to stay at RM1,520 and
resistance at RM1,555.
At the close, October 2006 and November 2006 decreased by RM31 each
to RM1,514 and RM1,521 a tonne respectively. December 2006 and
January 2007 declined by RM34 each to RM1,528 and RM1,540 per tonne
respectively. Volume rose to 14,775 lots from 9,119 lots on Tuesday
and open interests fell to 68,467 contracts from 68,811 contracts
On the physical market, September South slipped to RM1,525 a tonne
from RM1,550 per tonne on Tuesday. — Bernama
Malaysia Palm Oil