Wednesday, November 29

BMD sees potential prospects in palm oil and gold commodities


KUCHING: Bursa Malaysia Derivatives Bhd (BMD) sees promising prospects in the palm oil and gold market trade.

Following the launch of PhillipCapital Malaysia’s new Kuching branch, recently, BMD chief executive officer (CEO) Chong Kim Seng announced, the palm oil and gold commodities performed commendably on the market recently.

“Last year, our FCPO (Crude Palm Oil Futures Contract) traded at 200 million metric tonnes (MT). This year, FCPO has tracked trade to as much as 250 million MT.

“We can add the physical palm oil production numbers to these figures and we can see how important Malaysia is to the global palm oil industry,” Chong said in his speech.

He added, “On Monday, September 15, we achieved our historical highest trade volume in a day for our FCPO with 76,335 contracts which will be 1.908 million metric tonnes (MT).

“On Wednesday, September 10, our FCPO contract closed at historical highest open interest in a day with 287,859 contracts at 7.196 million MT.”

Chong also highlighted, “We have here in Malaysia, a globally well-known and world recognised FCPO. This means, a global market in palm oil is already here with us in our time zone and in Malaysia, and especially here in East Malaysia.

“If we see in the global market, East Malaysia is never far from the palm oil market topic and it is globally recognised as well.”

On gold, since the launch of gold futures contract (FGLD) on Bursa in October last year, Chong noted, the contract has traded as much as RM1.5 billion from over 670 single trading accounts.

He added, over 90 per cent of these accounts are from domestic retail participants.

“The contract is based on London Gold Fix which is a recognised global benchmark for gold, converted into ringgit.

“Over the period, the high had been at RM146 per gramme and the low had been RM126 per gramme. Now, it is trading at RM126 per gramme or about US$1,250 per troy ounce,” Chong explained.

With this contract traded in ringgit per gramme, he pointed out that Bursa had removed the foreign exchange exposure risks to make it more convenient and relevant for domestic market participants.

“With the bid per offer spread at RM0.15 per gramme, or less, it is the most competitive mode to gain market exposures to the movements of global gold prices,” Chong said.

He further advised, for those who own a lot of physical gold, gold futures contract can be ideal for them as it protects them against the fall in physical gold prices.

All in, Chong urged interested participants to seek trading platforms such as Phillip Futures Sdn Bhd, to access market, with market reports on product and investing and trading ideas to help interested parties to form their own investment strategies.