Galen Stops examines palm oil trading in Asia and argues that Bursa Malaysia is set to continue dominating volumes on this commodity.
Bursa Malaysia’s palm oil contract has enjoyed
steady success in recent years with volumes rising from 2,2m
contracts traded in 2006 to just under 6m in 2012. But back
then Malaysia was the leading producer and exporter of crude
palm oil and Bursa Malaysia was the only exchange offering a
crude palm oil futures contract.
Since then Indonesia overtaken it as the largest producer of
crude palm oil and the Indonesian Commodities and Derivatives
Exchange has launched its own crude palm oil futures contract,
which it hopes will become a benchmark for the region.
But while in theory the scene is set for a showdown between
the two contracts, the reality is that there a number of
factors that mean that Bursa Malaysia remain way ahead of the
For example, in terms of foreign interest in the exchanges
respective crude palm oil contracts, Bursa
Malaysia’s 2011 annual report showed that foreign
trading on the exchange grew by 59% year-on-year.
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