2024-03-05 05:22:04
Bursa Malaysia Derivatives Exchange (BMD), the world’s largest exchange for crude palm oil futures, will launch a soybean oil futures contract on March 18 to facilitate arbitrage between contracts on soybean oil and palm oil, its president said at an industry conference on Tuesday.
It will be the first non-palm oil-based edible oil futures contract to be listed on Malaysia Bursa Derivatives, Abdul Wahid Omar said, following an agreement with Dalian Commodity Exchange (DCE).
“The Soyoil contract will allow market participants to transparently arbitrage between soybean oil and palm oil prices on the same platform,” he said.
The BMD will use the settlement price of the soybean oil futures contract at the DCE as the basis for calculating the settlement price of its new US dollar-denominated soybean oil futures contract, he said. added.
Price movements of palm oil, soybean oil, sunflower oil and rapeseed oil depend on price movements of other competing edible oils.
Currently, traders and refiners hedge their risks related to different edible oils on different exchange platforms.
Currently, the Chicago Mercantile Exchange (CME Group), which merged with the Chicago Board of Trade (CBOT), offers one of the most liquid soybean oil futures contracts used by the industry as a benchmark.
BMD’s new soybean oil contract looks attractive, but it may not be easy for BMD to get a big stake due to the already very active existing contracts offered by CBOT and DCE, said a Mumbai-based trader with an international trading house.
“The new contract is expected to bring a lot of participation and liquidity, which will ultimately attract more people to trade the contract,” the trader said.
Meanwhile, Omar also said Malaysian palm oil prices are expected to improve in 2024, helped by increased demand from key markets, but warned that market participants should remain vigilant in the face of possible challenges.
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