KUALA LUMPUR: Bursa Malaysia Derivatives Exchange (BMD), the world's largest palm oil exchange, is slated to launch a soy oil futures contract on March 18 to facilitate arbitrage between soy oil and palm oil contracts.
Bursa Malaysia Bhd chairman Tan Sri Abdul Wahid Omar said this will be the first non-palm based edible oil futures to be listed on BMD.
BMD has signed an agreement with the Dalian Commodity Exchange (DCE) for the licencing of Soybean Oil Futures settlement price for its upcoming new product, the Bursa Malaysia DCE Soybean Oil Futures (FSOY) contract.
"Soyoil contract will enable market participants to seamlessly arbitrage between soybean oil and palm oil prices on the same platform," said Abdul Wahid at the 35th Annual Palm & Lauric Oils Price Outlook Conference & Exhibition (POC2024) here.
A significant highlight to the offering of this product is that it represents the first product collaboration between a Chinese derivatives exchange and an Asian exchange based outside of China, he said.
BMD will use the settlement price of the soyoil futures contract 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.
On the exchange front, BMD's crude pslm oil futures (FCPO) contract for 2023 recorded a trading volume of 14.8 million contracts or equivalent to 370 million tonnes, almost five times that of global production.
Abdul Wahid said the palm oil industry remains a significant contributor to Malaysia's economy, standing as one of its main commodity exports.
"Although pandemic-driven supply chain disruptions eased in 2023, global commodity markets still contended with strong headwinds, including monetary tightening, elevated geopolitical tensions and unpredictable weather conditions, among others," he added.