Home > Uncategorized > Bursa Malaysia to start RBD palm olein futures

Bursa Malaysia to start RBD palm olein futures

KUALA LUMPUR: — (Bloomberg) Malaysia will start a futures contract for refined, bleached and deodorised palm olein in 2014 so that refining margins can be hedged, according to the head of the country’s derivatives exchange.

“As markets become more competitive, a processing margin is no longer guaranteed,” Chong Kim Seng, chief executive officer of Bursa Malaysia Derivatives Bhd, said in an interview in Kuala Lumpur yesterday. 

“The processing margin becomes very volatile, depending on the cost of feedstock or raw materials, and the selling price of the products.”

Malaysia wants to broaden its range of financial products after establishing itself as the largest center for crude palm oil trading and Islamic finance. 

Bursa Malaysia Derivatives, which is 25 per cent owned by CME Group Inc. and the rest by Bursa Malaysia Bhd, started a gold futures contract in October. In three months to the end of 2013, a total of 24,253 contracts were traded, said Chong.

“This new contract will benefit the exporters and importers of RBD palm olein,” Chandran Sinnasamy, head of trading at LT International Futures Sdn Bhd, said by phone. “It’s an additional avenue for them to hedge to reduce their risk.”

The exchange is also looking into rubber and silver futures contracts, said Chong, without giving timeframes. A rubber futures contract may emulate palm oil’s success as Malaysia is both a producer and consumer, being one of the top makers of rubber gloves and condoms, while demand for silver is growing in Asia, he said.

Volumes for crude palm oil may double in three years to 400 million tonnes from 2013’s 200 million tonnes traded on the exchange, said Chong, speaking before a palm oil industry conference next week organised by Bursa Malaysia Derivatives and CME Group.

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