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On March 5, the Palm & Lauric Oils Price Outlook Conference & Exhibition (POC2024), organized by Bursa Malaysia Derivatives Berhad (BMD), was held in Kuala Lumpur. Ran Hua, Chairman of Dalian Commodity Exchange (DCE), attended the conference and delivered a speech. He noted that, over the past year, the futures market of DCE has maintained a stable and positive development momentum. In particular, the oil and oilseed sector continued its healthy development, with its function to serve the industry being strengthened.
Figures show that the total trading volume of commodity futures and options on DCE exceeded 2.5 billion lots in 2023, up 10% year on year, with an average daily open interest topping 14.7 million lots. The market’s risk diversification and carrying capacities continue to improve. The oil and oilseed sector, which consists of five products, i.e., No. 1 Soybean, No. 2 Soybean, soybean meal, soybean oil, and RBD palm olein, is one of the most influential product sectors on DCE. The oil and oilseed sector has achieved full coverage of futures and options tools and the opening-up of products across the entire industry chain. A mature market system has been established, which has promoted the cross-market arbitrage and risk management for global oil and oilseed companies, and continued to contribute to the smooth operation of cross-border trade and the stable development of the industry chain.
According to Ran Hua, the operation quality and international influence of the RBD palm olein futures market of DCE have been steadily improved. In terms of the market size, the trading volumeof RBD palm olein futures of DCE exceeded 210 million lots in 2023, ranking third among the global agricultural futures and options contracts. In terms of market structure, the positions of RBD palm olein futures held by entity clients accounted for 75%, while those of RBD palm olein options held by entity clients represented 65%, with a number of industrial clients from Southeast Asian countries being actively involved in the trading. In terms of functioning, the correlation coefficient between DCE’s price and the spot price in Chinese mainland, and the correlation coefficient between DCE’s price and the Crude Palm Oil Futures (FCPO) price on BMD both exceeded 0.9. At present, the futures price of DCE is adopted by more than 70% of the palm oil spot trade in Chinese mainland as pricing benchmark. Both the domestic and foreign companies are hedging their risks across the markets on DCE and BMD, so that the market’s ability to serve the real economy and the industry has continued to be strengthened.
Since 2006, DCE has been working closely with BMD to deepen their exchanges in products, markets, and other aspects. Especially at the 2023 International Oils and Oilseeds Conference & Agricultural and Livestock Industry (Derivatives) Conference held in Dalian, China, the two parties jointly signed an agreement on the licensing of delivery settlement price of DCE’s soybean oil futures to further deepen their strategic cooperation. The Bursa Malaysia DCE Soybean Oil Futures (FSOY) contract developed on this basis will be listed and traded on BMD on March 18 this year.
