PETALING JAYA: Bursa Malaysia Derivatives Bhd completed its first physical delivery of its East Malaysia Crude Palm Oil Futures Contract (Fepo) in Sarawak last Friday.
The delivery saw a total of 10 contracts representing 250 metrics tonnes of crude palm oil (CPO) transacted at one of the approved Port Tank Installations (PTIs) in Bintulu, Sarawak. The PTI is operated by Biport Bulkers Sdn Bhd, a wholly owned subsidiary of Bintulu Port Holdings. Bintulu Port Holdings is a public listed company that manages and operates the vegetable oil bulking terminal that caters for the rapidly growing palm oil industry in Sarawak.
In a statement, the exchange said physical deliveries under the Fepo contract have successfully taken place in all three three PTIs in East Malaysia namely Sandakan, Lahad Datu, and Bintulu.
Bursa Malaysia Derivatives CEO Samuel Ho said the Fepo, which was launched in October 2021, aims to provide an effective instrument for physical players and participants in the East Malaysia palm oil market to manage price risk, particularly in a highly volatile environment.
“The first successful physical delivery in Sarawak demonstrates the industry’s recognition of Fepo as a platform for alternative price discovery in East Malaysia.”
The CPO Futures markets of Bursa Malaysia Derivatives has seen increased participation due to the recent price volatility in palm oil. On May 6, the Fepo contract reached a new daily trading volume high of 186 contracts, equivalent to 4,650 metric tonnes of CPO.
Meanwhile, Bintulu Port Holdings group CEO Bhd Datuk Mohammad Medan Abdullah said the success of the first physical delivery marked a new milestone for Biport Bulkers Sdn Bhd.
“As the biggest palm oil terminal in Sarawak, Biport Bulkers handles more than 91% of the total palm oil export in Sarawak and 24% of the total Malaysian palm oil export. The expansion of services and facilities that we offer to all palm oil traders in East Malaysia will contribute to the growth of Sarawak and Sabah’s market share as key palm oil producing and exporting states in Malaysia,” he added.
Sarawak Oil Palm Plantation Owners Association (Soppoa) chairman Eric Kiu Kwong Seng said with Bintulu port’s world-class logistical infrastructure, Sarawak producers are now able to sell their crude palm oil on the Bursa Malaysia Derivatives platform, which is accessible electronically and globally. In the long run, it is hopeful that such development would allow Sarawak and Sabah to enjoy greater pricing transparency and autonomy. Soppoa looks forward to a continuous collaboration with Bursa Malaysia Derivatives to upskill its members and develop the next phase of the Sarawak palm oil trading ecosystem.
Bursa Malaysia Derivatives is the first exchange in the world to offer physically delivered commodity derivatives contracts with sustainable requirement mandated for delivery. All physical deliveries made under its Crude Palm Oil Futures and Fepo contracts must be sourced from palm oil mills that meet the Oil Palm Management Certification under the Malaysian Sustainable Palm Oil Certification Scheme’s requirements. These commitments are in line with the exchange’s efforts to foster sustainable development through its product offerings and across the entire value chain.
