Soybean oil futures now listed on Bursa Malaysia Derivatives

KUALA LUMPUR: Bursa Malaysia Derivatives Bhd has commenced trading of soybean oil futures, the first non-palm-based oil futures contract to be listed on the domestic market.

In a statement, Bursa Malaysia Bhd said the trading of DCE Soybean Oil Futures (FSOY) follows the agreement between Bursa Malaysia Derivatives and Dalian Commodity Exchange (DCE) for the licensing of soybean oil futures settlement price in November 2023.

According to the the Exchange, the relative prices of palm and soybean oils, the two most widely consumed edible oils, are important for market players particularly food manufacturers, as the oils are frequently used interchangeably as recipe ingredients.

“One important aspect of fostering a more facilitative and competitive marketplace entails expanding our derivatives offerings and establishing cross-exchange collaborations.

“We are pleased to be the first exchange outside of China to be granted licence to incorporate DCE’s commodity futures settlement prices into our product offering.

“In addition to our existing futures contracts, market participants can now leverage FSOY as a risk-management tool to hedge against price fluctuations in times of market volatility and evolving complexities of international markets,” said Bursa Malaysia Derivatives chairman and Bursa Malaysia CEO Datuk Muhamad Umar Swift.

A spokesperson of the Dalian Commodity Exchange said the launch of FSOY is in line with the Belt and Road initiative and celebrates the 50th anniversary of China-Malaysia diplomatic relations.

“It enriches the tools available for global oils and fats industry chain participants to manage price risks, and strengthens the connections between the two countries’ futures markets,” it added.

FSOY is a US$-denominated cash-settled contract, with the final settlement price calculated based on the DCE Soybean Oil Futures Contract’s one-off delivery settlement price on DCE’s 10th trading day of the delivery month.

The price is then adjusted for conversion from Renminbi (CNY) into US$, and rounded to the nearest US$0.25.

This adjustment allows international traders and exporters of physical soybean products to China to effectively hedge their price risk using the contract.

FSOY is available for trading during morning and afternoon trading sessions, every Monday to Friday from 9am to 6pm (Malaysia time).

It is also available during After-Hours (T+1) Trading Session, every Monday to Thursday from 9pm to 11.30pm (Malaysia time).

For more information about the FSOY contract, visit https://bit.ly/fsoy