Bursa Malaysia Derivatives Launches East Malaysia Crude Palm Oil Futures (FEPO)

Published : Friday, October 1, 2021, 5:30 pm


KUALA LUMPUR, Malaysia, Oct. 1, 2021 /PRNewswire/ -- Bursa Malaysia Derivatives Berhad ("Bursa Malaysia Derivatives") will be launching the East Malaysia Crude Palm Oil Futures ("FEPO") Contract to meet the evolving needs of the Sabah and Sarawak palm oil market players for greater price transparency and alternative risk management tool.

The launch of FEPO will be officiated by Datuk Dr. Hajah Zuraida Kamaruddin, Minister of Plantation Industries and Commodities; Datuk Seri Panglima Haji Hajiji Haji Noor, Chief Minister of Sabah; and Datuk Patinggi (Dr) Abang Haji Abdul Rahman Zohari Tun Datuk Abang Haji Openg, Chief Minister of Sarawak, through a Virtual Launch Ceremony on Monday 4 October 2021. The FEPO Contract will be made available to traders once launched, effective 4 October 2021.

"With Sabah and Sarawak accounting for nearly half of the country's Crude Palm Oil production, we identified a need to provide a hedging mechanism that caters to the East Malaysian palm oil players," said Datuk Muhamad Umar Swift, Chairman of Bursa Malaysia Derivatives and Chief Executive Officer of Bursa Malaysia Berhad. "The approved port tank installations in Sabah and Sarawak namely in Bintulu, Lahad Datu and Sandakan will improve the logistics costs of physical delivery and benefit both upstream and downstream market players in East Malaysia." 

In 2020, the Exchange's port tank installations in Peninsular Malaysia delivered 670,125 metric tonnes of Crude Palm Oil via its Crude Palm Oil Futures ("FCPO") physical delivery, generating economic value for a wide range of businesses. Similarly, the participation of new port tank installations in FEPO is expected to result in more job opportunities and higher economic values for the palm oil-related businesses in East Malaysia.

The FEPO contract is expected to entice international investors, particularly the commodity traders in China's Palm Olein Market of the Dalian Commodity Exchange, to trade on both Exchanges concurrently.

"Our FEPO contract offers valuable arbitraging opportunities with the existing actively traded FCPO due to the price difference between Crude Palm Oil from Peninsular Malaysia and East Malaysia," commented Samuel Ho, Chief Executive Officer of Bursa Malaysia Derivatives. "Additionally, with its trading hours aligned with those of RBD Palm Olein in Dalian Commodity Exchange at 9:00am, the FEPO contract will attract commodities desks, including lauric oils traders and arbitrageurs looking for arbitraging opportunities between both markets."

The introduction of the new FEPO contract will strengthen Bursa Malaysia Derivatives' palm complex offerings, further cementing Malaysia's position as the global centre for palm oil price discovery. Bursa Malaysia Derivatives remains committed to collaborating with key market stakeholders to create more vibrant and attractive markets for all its customers around the world.

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