KUALA LUMPUR (March 8): The amount of crude palm oil (CPO) traded via futures contracts (FCPO) on Bursa Malaysia Derivatives (BMD) spiked in 2022 due to exceptionally strong prices of the tropical oil recorded last year.
According to BMD’s director Mohd Saleem Kader Bekas, 405 million tonnes of CPO, equivalent to five times of the world production, were traded.
The group recorded 16.2 million FCPO contracts last year.
“This is a historical record for FCPO trading volume. The exchange also achieved the highest average trading volume (ADV) for all its products combined for the third consecutive year with 19.1 million contracts traded in 2022,” said Mohd Saleem at the 34th Palm & Lauric Oils Price Outlook Conference & Exhibition (POC2023) on Wednesday (March 8).
He added that FCPO continues to be the benchmark for the CPO market, with foreign institutions increasing their participation in the derivatives market, accounting for 54% of the exchange's total product volume, which is an increase from 46% in 2021.
“This signifies the strong appeal of Bursa Malaysia derivatives product to market participants, as well as the confidence that investors have in using our product as a risk management,” he added.
He added that the exchange's East Malaysia Crude Palm Oil Futures (FEPO) contract — launched in 2021 — saw 5,000 contracts traded in 2022.
Since the introduction of After-Hours Trading in December 2021, the exchange has seen an increase in trading volume during the night session, said Mohd Saleem.
“On Dec 1 2022, the After-Hours Trading session recorded the highest daily volume with 19,065 contracts traded.
“We have also seen average night trading volume more than double year-on-year to 7,672 average contracts in 2022, which amounts to 10% of the total day and night average trading volume,” he said.
He added Bursa Malaysia will continue to drive efforts towards the sustainable development in the palm oil supply chain through strategic collaborations.
“Following the successful integration of the Malaysian Sustainable Palm Oil certified CPO into BMD’s physical delivery process, an MOU was inked with the Malaysian Palm Oil Certification Council (MPOCC) last year to jointly promote sustainability and responsible practices among palm oil players,” he said.
Bursa Malaysia was formally admitted as an affiliate member of Roundtable on Sustainable Palm Oil (RSPO) on June 24 2022.
According to the Malaysian Palm Oil Board (MPOB), the price of locally delivered CPO averaged RM5,087.50 per tonne in 2022, setting a new high from the previous record average of RM4,407 per tonne set in 2021.
FCPO spot month prices have normalised and are trading within a range of RM3,600 to RM4,400 per tonne.
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