Online Commodity Trading

Bursa Malaysia Derivatives Berhad (BMD), operates the most liquid and successful crude palm oil futures (FCPO) contract in the world. On September 17, 2009, Bursa Malaysia Berhad entered into a strategic partnership with Chicago Mercantile Exchange (CME) with the view to improve accessibility to its derivatives offerings globally. This includes licensing of the settlement prices of the FCPO to position Malaysia as the global price benchmark for the commodity as well as global distribution of Bursa Malaysia's products through the Globex electronic trading platform.

BMD has the following palm oil products available to be traded on the CME Globex ^® electronic trading platform:

Commodity Derivatives

• Crude Palm Oil Futures (FCPO)
• USD Crude Palm Oil Futures (FUPO)  
• Crude Palm Kernel Oil Futures (FPKO)

Crude Palm Oil Futures (FCPO) Contract Code FCPO Underlying Instrument Crude Palm Oil Contract Size 25 metric tons Minimum Price Fluctuation RM1 per metric ton Daily Price Limit With the exception of trades in the spot month, trades for  future delivery of Crude Palm Oil in any month shall not be  made, during any one Business Day, at prices varying more  than 10% above or below the settlement prices of the  preceding Business Day (“the 10% Limit”) except as provided  below. When at least 3 non-spot month contracts are trading at the  10% Limit, the Exchange shall announce a 10-minute cooling  off period (“the Cooling Off Period”) for all contract months  (except the spot month) during which trading shall only take  place within the 10% Limit. Following the Cooling Off Period,  all contract months shall be specified as interrupted for a  period of 5 minutes, after which the prices traded for all  contract months (except the spot month) shall not vary more  than 15% above or below the settlement prices of the  preceding Business Day (“the 15% Limit”). If the 10% Limit is triggered less than 30 minutes before the end of the first trading session, the following shall apply:- the contract months shall not be specified as interrupted; the 10% Limit shall be applied to all contract months (except the spot month) for the rest of the first trading session; and the 15% Limit shall be applied for all contract months (except the spot month) during the second trading session. If the 10% Limit is triggered less than 30 minutes before the end of the second trading session, the 10% Limit shall be applied to all contract months (except the spot month) for the rest of the Business Day. Contract Month Spot month and the next 5 succeeding months, and thereafter, alternate months up to 24 months ahead Trading Hours First trading session: Malaysian time: 10:30 a.m. to 12:30 p.m. Second trading session: Malaysian time: 3:00 p.m. to 6:00 p.m. Speculative Position Limits 500 contracts net long or net short for the spot month 5,000 contracts for any single delivery month except for the spot month ,000 contracts for all contract months combined Final Trading Day and Maturity Date Contract expires at noon on the 15th day of the delivery month, or if the 15th is a non-market day, the preceding Business Day. Tender Period 1st Business Day to the 20th Business Day of the delivery month, or if the 20th is a non-market day, the preceding Business Day. Contract Grade and Delivery Points Crude Palm Oil of good merchantable quality, in bulk, unbleached, in Port Tank Installations approved by the Exchange located at the option of the seller at Port Kelang, Penang/Butterworth and Pasir Gudang (Johor). Free Fatty Acids (FFA) of palm oil delivered into Port Tank Installations shall not exceed 4% and from Port Tank Installations shall not exceed 5%. Moisture and impurities shall not exceed 0.25%. Deterioration of Bleachability Index (DOBI) value of palm oil delivered into Port Tank Installations shall be at a minimum of 2.5 and of palm oil delivered from Port Tank Installations shall be at a minimum of 2.31. Deliverable Unit 25 metric tons, plus or minus not more than 2%. ettlement of weight differences shall be based on the simple average of the daily Settlement Prices of the delivery month from: the 1st Business Day of the delivery month to the day of tender, if the tender is made before the last trading day of the delivery month; or the 1st Business Day of the delivery month to the Business Day immediately preceding the last day of trading, if the tender is made on the last trading day or thereafter.

Crude Palm Kernel Oil Futures (FPKO)

Contract Code	FPKO
Underlying Instrument	Crude Palm Kernel Oil
Contract Size	25 metric tons
Minimum Price Fluctuation	RM1 per metric ton
Daily Price Limits	RM100 per metric ton above or below the preceding day's Settlement Prices for all months, except spot month. Limits are expanded when the Settlement Prices of all three quoted months immediately following the current month, in any day, are at limits as follows: Day Limit First Day RM100 Second Day RM150 Third Day RM200 Daily price limits will remain at RM200, when the preceding day's settlement prices of all the three quoted months immediately following the spot month settle at limits of RM200. Otherwise, it shall revert to the basic limit amount of RM100.
Contract Months	Spot and the next five succeeding months, and thereafter, alternate months up to 12 months ahead.
Trading Hours	First trading session: Malaysian 10:30 a.m. to 12:30 p.m. Second trading session: Malaysian 3:00 p.m. to 6:05 p.m.
Final Trading Day and Maturity Date	Contract expires at 12:05 on the 15th day of the delivery month. If the 15th is a non-market day, the preceding Business Day.
Tender Period	First Business Day to the 20th Business Day of the delivery month, or if the 20th is a non-market day, the preceding Business Day.
Contract Grade and Delivery Points	Each tender shall consists of 25 metric tons of Crude Palm Kernel Oil in bulk unbleached of good merchantable quality and stored at a Port Tank Installations located at the option of the seller at Port Kelang, Penang/Butterworth and Pasir Gudang (Johor).  Free Fatty Acids (FFA) content (as Lauric Acid of CPKO) delivered into Port Tank Installations shall not exceed 3.5% and out of Port Tank Installations shall not exceed 4%. Moisture and impurities shall not exceed 0.5%. Iodine value at range 16.5 < 18.75 Colour range 4 Red - 8 Red & 60 Yellow Max.
Delivery Unit	25 metric tons, plus or minus not more than 2%. Settlement of weight differences shall be based on the simple average of the daily Settlement Prices of the delivery month from:  (a) the 1st Business Day of the delivery month to the day of tender, if the tender is made before the last trading day of the delivery month; or (b) the 1st Business Day of the delivery month to the Business Day immediately preceding the last day of trading, if the tender is made on the last trading day or thereafter.
Position Limit	250 contracts net long or net short on the spot month. 1,000 contracts on any single month except for the spot month. 1,500 contracts on all contract months combined.

 

USD Crude Palm Oil Futures (FUPO)

FUPO is a USD denominated palm oil futures contract which compliments the existing MYR denominated Crude Palm Oil Futures contract (FCPO). It is a cash settled contract which does not involve physical delivery of the underlying Crude Palm Oil (CPO). FUPO also consolidate Malaysia’s position as the leading price discovery centre for palm oil traded globally.

Contract Code	FUPO
Underlying Instrument	Crude Palm Oil
Contract Size	25 metric tons
Minimum Price Fluctuation	USD0.25 per metric ton
Settlement Methodlogy	Cash Settled
Daily Price Limits	A +/- 10% limit from the Settlement Prices of the preceding trading day will apply for all contract months, except for the spot month. When at least 3 non-spot month contracts are trading at the 10% limit, a 10 minute Cooling Off period will apply for all quoted months (except spot month as there are no price limits for spot month contract) during which trading shall only take place within the 10% Limit. Following the Cooling Off period, all quoted months shall be interrupted for 5 minutes, after which the price limit will be expanded to +/-15%. The 10% price limit will apply for the rest of the 1st trading session if the price limit is triggered less than 30 minutes before the end of session, and the price limit will be expanded to 15% for the 2nd trading session. If the 10% limit is triggered less than 30 minutes before the end of the 2nd trading session, the 10% limit will apply for the rest of the trading day.
Contract Months	Spot month and the next 5 succeeding months, and thereafter, alternate months up to 24 months ahead
Trading Hours	First trading session : Malaysian Time: 10:30 a.m. to 12:30 p.m. Second trading session : Malaysian Time: 3:00 p.m. to 6:00 p.m.
Speculative Position Limits	500 contracts net long or net short for the spot month   5,000 contracts for any single contract month except for the spot month   8,000 contracts for all contract months combined
Final Trading Day and Maturity Date	Contract expires at noon on the 15th day of the spot month, or if the 15th is a nonmarket day, the preceding Business Day.
Final Settlement	Cash settlement based on the Final Settlement Value.
Final Settlement Price	The average price of the Daily Spot Month Settlement Price of the FCPO on the last 5 Business Days prior to the expiration including the Final Trading Day. The mid exchange rate of USD/MYR as at 6.00pm on each of the 4 Business Days prior to the Final Trading Day taken from Bank Negara Malaysia shall be used as the conversion price for the calculation of FCPO Daily Spot Month Settlement Value (Mid price USD/MYR multiplied by the Daily Spot Month Settlement Price of FCPO). The mid Exchange rate of USD/MYR as at noon will be used for calculation of Daily Spot Month Settlement Price for the Final Trading Day. The FUPO Final Settlement Value shall be the average of the converted FCPO Daily Spot Month Settlement Prices rounded to the nearest 25 cents.

Eight EPPs to capture fast growing global demand for palm oil

Reports by IZWAN IDRIS, LOH FOON FONG, LESTER KONG, RACHAEL KAM, WONG PEK MEI, SHAUN HO and REENA NATHAN in The Star

MALAYSIA’S palm oil industry is the fourth largest contributor to the economy and currently accounts for RM1,889 (or 8%) of the gross national income (GNI) per capita. The industry spans the entire value chain from plantations to downstream activities.

Its development is mainly private-sector driven and is still heavily skewed towards upstream activities, namely production of fresh fruit bunches (FFB) in plantations, processing of FFBs in mills and palm kernel crushing and palm oil refining activities.

While Government support is primarily targeted at promoting downstream activities and supporting independent smallholders, the core focus of the Palm Oil National Key Economic Area (NKEA) is to reinforce the leading role of the private sector in steering the palm oil industry.

The aim is to raise the industry’s GNI contribution from the current RM52.7bil to RM178bil by 2020.

It plans to bridge this GNI gap through the implementation of eight core entry point (EPP) spanning across the palm oil value chain to capture the fast growing global demand for palm oil, which registered a growth rate of 10% between 2000 and 2009.

Five EPPs will focus on improving upstream productivity generating as incremental GNI of RM33.1bil in 2020. The implementation of these EPPs will transform Malaysia’s oil palm industry, resulting in significant productivity improvement from 21 to 26.2 tonnes per hectare per year.

These EPPs are accelerating the replanting of oil palm, improving FBB yield, improving worker productivity, increasing the oil extraction rate and developing biogas at the palm oil mills.

The other three EPPs are focused on downstream expansion that is targeted to generate an incremental GNI of RM14bil by 2020.

These initiatives will involve coordinating public-private R&D efforts with a strong commercialisation focus. Rising income from downstream products is expected to constitute at least 25% of total palm oil income.

These EPPs are developing oleo derivatives, commercialising second generation biofuels and expediting growth in food and health-based downstream segments.

Edible Oil: To Compare Olive Oil with Palm Oil

Olive Oil And Palm Olein Are Equally Beneficial Against Coronary Heart Disease Risk

Extra Virgin Olive Oil

Olive oil is touted as the gold standard among all edible oils today; a reputation that has been gained primarily from its association of a lower incidence of heart disease among the Mediterranean populations who have traditionally consumed olive oil as their main dietary fat. The component of interest is the monounsaturated oleic acid content of olive oil, which on average is about 70% of its composition.

Palm Olein, the liquid fraction of Palm Oil, averages 47-53% of its composition as the same oleic acid that is found in olive oil and the other monounsaturated oils.

Did you know that despite the lower content of monounsaturated oleic acid in palm olein, the ability of olive oil and palm olein to regulate plasma cholesterol levels in humans is essentially identical. 

Humans fed diets predominating as either olive oil or palm olein showed identical plasma cholesterol response which augers well for the beneficial effects of these oils against Coronary Heart Disease risk.

Study No.1

Olive Oil and Palm Olein Have Similar Effects on Plasma Cholesterol in Humans


Ng, K.W.T, Hayes, K.C., Dewitt, G. F., Jegathesan, M., Satgunasingam, N., Ong, A. & Tan, D. (1992). Dietary palmitic and oleic acids exert similar effects on serum cholesterol and lipoprotein profiles in normocholesterolemic men and women. J Am Coll Nutr. 11: 383-90.

Reference/Study Characteristics	Dietary Oil Source	Fatty Acids (% en)			Lipids (mg/dL)
		16:0	18:1	18:2	TC	LDL-C	HDL-C	L/H ratio
Ng et al. (1992) J. Am. Coll. Nutr. 11, 383-390; 20M, 13F; 31% en.	Palm Olein Olive Oil	13.4 6.3	14.0 21.8	3.7 2.9	195 197	133 134	37 37	3.59 3.62

Study No. 2
Olive Oil and Palm Olein Have Similar Effects on Plasma Cholesterol in Humans

Choudhury, N., Tan, L. & Truswell, A.S. (1995). Comparison of palmolein and olive oil: effects on plasma lipids and vitamin E in young adults. Am J. Clin Nutr. 61:1043-51.

Reference/Study Characteristics Dietary Oil Source Fatty Acids (% en) Lipids (mg/dL) 16:0 18:1 18:2 TC LDL-C HDL-C L/H ratio Choudhury et al. (1995) Am. J. Clin. Nutr. 61, 1043-1051; 10M, 9F; 31% en. Palm Olein Olive Oil 10.1 5.1 11.6 18.9 4.3 3.4 180 179 129 132 35 31 3.7 4.3

Conclusion
Palm Olein, in showing nutritionally similar result as olive oil is better as it is much more economical.

Source

Sustainable palm oil production doubles

08/10/2010 (WWF) - Global production of sustainable palm oil has doubled so far this year, meaning that buyers have access to more palm oil than ever before that was produced without damaging biodiversity, according to new figures from the Roundtable on Sustainable Palm Oil (RSPO).

“Annual production capacity of RSPO-certified sustainable palm oil jumped over the 3 million tonnes mark last month, showing the steepest increase thus far since certification began in August 2008,” according to the Roundtable.

With current global palm oil production projected at around 46.6 million tones annually, about 6.4 percent of this production is now certified as sustainable by the RSPO – up from 3.2 percent a year ago.

“This really shows that some palm oil producers are working hard to make certified sustainable palm oil a world standard,” said Cherie Tan. “However, these producers account for less than 20 percent of the producers represented in the RSPO.

“All RSPO producers must commit to progress, and to adopt time bound plans towards certification.”

WWF released the Palm Oil Buyers’ Scorecard in October 2009 showing that the majority of European palm oil buyers were failing to buy certified sustainable palm oil, despite its availability and the previous commitments by many companies to purchase it. WWF will release its next edition of the Scorecard in the last quarter of 2011.

So far this year, about 60 percent of the sustainable palm oil produced has been bought, the RSPO said. In 2010's first quarter, the overall market uptake of sustainable palm oil was 95 percent, according to the RSPO.

This represents a positive commitment by a handful of European buyers, where buyers are more responsive to environmental and social issues, WWF said.

But similar actions need to be taken by more palm oil buyers in Europe, as well as in other markets, particularly China and India, which are the two largest consuming markets of palm oil. Those two markets represent 31 percent of total consumption in 2010.

China and India have the potential to exert massive footprints on the areas where palm oil is grown and produced, Tan said.

“Transforming the global palm oil market cannot be realized unless the most influential companies in China and India move toward sustainability,” Tan said.

The growing demand for palm oil is adding to the already severe pressure on the world’s remaining rainforests. The loss of forest in Indonesia is threatening the survival of species such as the orang-utan, the Sumatran tiger, rhino and elephant.

Forest loss and the draining of peatlands for palm oil plantations is also contributing to climate change and displacing local people who rely on the forest for food and shelter.

Palm oil is one of the world's fastest expanding crops, with significant growth in Southeast Asia as well as West Africa, Papua New Guinea and South America.

It is because of threats like this that WWF worked with other NGOs and the palm oil industry to set up the Roundtable on Sustainable Palm Oil (RSPO) in 2003. Certified Sustainable Palm Oil has been available since November 2008 and provides assurance that valuable tropical forests have not been cleared and that environmental and social safeguards have been met during the production of the palm oil.

This week’s figures come ahead of the Roundtable’s 8th Annual meeting, which will be held Nov. 8-11 in Jakarta, Indonesia.

Sustainable palm oil producers.(Informalia): An article from: Food Trade Review 

Palm oil expected to hit RM3,600 in H1 next year

06/10/2010 (Business Times) - Palm oil prices can hit RM3,600 a tonne as soon as in the first half of next year, traders say, which would be their highest since 2008 as demand continues to be robust, while supply is hit by erratic weather.

"In the next six to nine months, palm oil prices should trade at around RM3,600 per tonne, if all fundamental factors remain the same," said NextView Sdn Bhd chief market strategist Benny Lee.

He attributed the increase in palm oil prices since July to a weaker US dollar and a stronger yuan.

The last time palm oil prices hit their all-time high, at RM4,486 per tonne, was in mid-2008.

Lee was presenting his take on palm oil price movement at the International Palm Oil Trade Fair and Seminar 2010 in Kuala Lumpur yesterday.

While he foresees several pullbacks and corrections in the pricing in the immediate weeks, Lee was of the view that it will move towards RM2,800 and possibly surpass RM2,950 by the end of the year.

Yesterday, palm oil futures on the Malaysian Derivatives Exchange gained RM29 to close at RM2,705 per tonne. The day before, it fell to a two-week low due to sell-off in the grains markets after a report of huge US corn stockpiles.

India-based Transgraph Consulting Pvt Ltd chief executive officer P.V. Murali Krishna, also present at the event, was bullish on palm oil in the next six months.

"The current price strength is supported by a relative shortage in oil crop output as a result of erratic weather patterns. There's excess rain in the Indian continent but acute dryness in South America. North America has had experienced frost and Europe is not getting enough rain," he said.

Rapid urbanisation in China and India has resulted in lower agriculture activities, forcing these emerging economies to rely on vegetable oil imports.

Malaysia and Indonesia, the world biggest palm oil supplier, stand to gain from the increasing appetite for food from the world's two most populous nations.

"The focus is on Asia. China and India's robust economy and growing population is set to consume palm oil," Murali said.

Firm vegetable oil prices, including palm oil, seen in H1 2011

KUALA LUMPUR: Global vegetable oil prices, including that of crude palm oil (CPO), are expected to remain firm in the first two quarters of 2011 should soybean production from South America stays flat due to stagnating planted areas, said Malaysian Palm Oil Council (MPOC) chief executive officer Tan Sri Dr Yusof Basiron.

Soybean production in South America next year would be the main factor in determining the price direction of vegetable oils in the first half of next year.

“At this point of time, the projected lower soybean production may further deteriorate as dry spell remain a teething factor for the output,” Yusof said.

He said this in his summary after presenting a paperwork on Glimpse of 2011 – Pointers for 2011 on Global Oils and Fats Trade at the 3rd International Palm Oil Trade and Seminar yesterday.

In addition, an increase in soyoil application for biodiesel production in South America was expected to reduce the availability of soyoil traded globally.

However, CPO production from major producers Malaysia and Indonesia next year may rise substantially due to the delay in potential yield this year as a result of El Nino and La Nina effects, he added.

Palm oil was also expected to continue to be the growth leader in output, with Malaysia and Indonesia as the main supplier for 2011.

For 2010, Yusof said the average CPO price was projected to stay above RM2,600 per tonne, given the firm crude mineral oil price, which had supported the palm oil price so far, “is expected to last for the rest of this year.”

While demand is projected to increase by 4.3 million tonnes this year, the performance of oils and fats production in the last quarter would determine whether there will be any changes in production volume projected in 2010.

He said: “The United States, the European Union (EU) and China are on the radar as their major oil crops are due for harvesting and entering the market at this period.

“The estimated production remains intact and this has been factored into the current CPO price trading at above RM2,700 per tonne.”

Yusof said price would also be supported by the greater role of palm oil in satisfying global demand this year. In addition, the La Nina effect on palm oil production in the second half of this year could likely increase palm fruit moisture content and lower extraction rates, thus reducing harvesting rounds.

Based on OilWorld estimate, La Nina phenomenon would likely reduce Malaysia’s palm oil production by 200,000 tonnes.

US-based Green Earth Fuels LLC executive vice-president (government and regulatory affairs) Jeffrey M. Trucksess said palm biodiesel (palm methyl ester – PME) had made significant inroads in the US biodiesel market in recent years and had tremendous potential.

“However, significant political, regulatory and public relation issues can derail this future,” he said.

PME producers from Malaysia must proactively manage the public perception on palm oil in the United States and Europe by providing more education to policymakers there, actively participate in regulatory bodies and promote sustainability standards.