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Speaking at the Annual Palm and Lauric Oils Conference and Exhibition : Price Outlook 2005/2006 (POC), Tun Mohamed Dzaiddin Haji Abdullah, Chairman of Bursa Malaysia said that with high volatility in crude palm oil prices, buyers and sellers of palm oil and palm-based products will need effective hedging instruments.
“Bursa Malaysia, a consolidated, demutualised exchange offering diversified investments in equities, derivatives and offshore instruments, provides such risk management tools.
Bursa Malaysia Derivatives, formerly known as MDEX, currently offers the Crude Palm Oil Futures Contract, launched in 1980 and the Crude Palm Kernel Oil Contract, launched in 2004. The Crude Palm Oil Futures Contract (FCPO) is the 10th largest commodity based derivative contract traded worldwide.
“These futures contracts have been carefully designed for the oils and fats industry to hedge against adverse price changes. The Crude Palm Oil Futures market is the preferred benchmark for the pricing of the palm oil and its products worldwide. This is evident in the growth of the market over the last few years with turnover averaging more than 5,500 lots in 2004, representing a notional value of approximately 140,000 metric tons of crude palm oil traded per day.
“Open Interest has also grown, averaging 30,000 lots in 2004. This signifies the trade’s confidence in our markets,” Tun Dzaiddin said.
The migration to an electronic trading platform from an open outcry system in 2001 had resulted in a more efficient marketplace. The Common Trading Platform or the CTP which will be implemented by Bursa Malaysia will spur further growth for the market.
“The CTP for derivatives trading, which will be launched in the 2nd Quarter of this year, will support continuous trading, improve order execution and generally enhance operational efficiency.”
In closing, Tun Dzaiddin thanked the Ministry of Plantation Industries & Commodities Malaysia, the Malaysian Palm Oil Promotion Council and Tourism Malaysia for the support towards the event. He also thanked the sponsors - Group, Fortis Bank, Rabobank International, Cargill Palm Products, HSBC Bank and PT SMART, and the official partners - Malaysia Airlines, Reuters, Computer Systems Advisers, NEC, Oils & Fats International, Standard Chartered and Global Oils & Fats Magazine.
“Bursa Malaysia will continue to enhance the breadth and depth of investment instruments in offering an internationally competitive and efficient marketplace for investment and fund raising. We will also continue to play an active role in the POC,” Tun Dzaiddin said.
POC 2005 is organised by Bursa Malaysia and it is the 16th gathering of the Annual Palm and Lauric Oil Conference and Exhibition: Price Outlook. POC is the largest gathering of palm oil industry experts. POC 2005 is attended by almost 1,300 participants from 35 countries.
