365 million tonnes of CPO traded on Bursa Malaysia Derivatives in 2020

365 million tonnes of CPO traded on Bursa Malaysia Derivatives in 2020
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KUALA LUMPUR (March 24): There was a spike in the trading volume of crude palm oil (CPO) futures contracts on Bursa Malaysia last year.

According to Bursa Malaysia Derivatives Bhd's (BMD) chief executive officer Samuel Ho, the average daily contracts traded in 2020 grew 33% to more than 73,000, a historical high for the derivatives exchange.

Speaking at Bursa Malaysia Derivatives Palm and Lauric Oils Price Outlook Conference 2021 (Virtual POC 2021), Ho noted that some 365 million tonnes of CPO, equivalent to 19 times of world production, were traded via futures contracts in 2020.

"The trading volume in our market continues to see remarkable growth amid the volatile environment," he said, noting that the reduction in palm oil exports was short-lived despite the Covid-19 pandemic partial lockdowns that were imposed globally and curbed demand for edible oil.

Ho highlighted that the exchange hit and created 18 trading records last year, including the highest-ever monthly trading volume of over two million contracts for all derivatives products and a new record of 14.6 million FCPO (Crude Palm Oil Futures Contract) were traded in 2020, surpassing the previous record of 11.9 million contracts in 2017.

Ho said the key importing countries had started to restock by the second quarter of 2020 (2Q20), adding that the CPO rally since June 2020 was driven by supply disruptions in key edible oils as well as palm oil-producing regions.

"With demand outpacing supply, BMD third month benchmark price surpassed RM3,000 to trade RM3,064 per tonne by the end of October [of last year]. This was 38% higher than a year ago, reaching RM3,600 per tonne in the month of December last year," he said.

The FCPO has a 50-50 distribution of institutional traders and other market participants.

Ho also pointed out that there was growth among OCPO (Options on Crude Palm Oil Futures) contracts, which increased to 63,636 contracts in 2020, from 53,100 in 2019.

At the same time, the open position and trading volume for OCPO hit a historical all-time high in January with the trading volume of 16,123 contracts and open position at 35,673 contracts.

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Kathy Fong