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Bursa, China hail competition from Jakarta
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BURSA Malaysia Derivatives Sdn Bhd and its Chinese counterpart, Dalian Commodities Exchange, said they see Jakarta's impending launch of the rupiah-based crude palm oil (CPO) futures contract next month as healthy competition."We welcome more competition. The profile of palm oil is raised internationally with more exchanges introducing palm oil futures. It also jives with our tie-up with CME Group to launch the new US dollar-denominated palm oil futures contract (known as CUPO)," Bursa Malaysia Bhd chief executive Datuk Yusli Mohamed Yusoff told a news conference at the Palm Oil Outlook Conference 2010 in Kuala Lumpur yesterday.
Indonesia has been planning for a local benchmark, which it feels will provide a better reflection of local supply and demand and will eliminate currency risk factors. PT Bursa Komoditi & Derivatif Indonesia, Indonesia's new commodities and derivatives exchange (ICDX), has reportedly said it hopes to succeed rival Jakarta Futures Exchange, which struggles to attract planters to trade CPO on its exchange.On the launch of CUPO in Chicago on May 23, Yusli said it will boost palm oil's popularity as a reliable and flexible hedging tool. Malaysia is the world's biggest palm oil exporter and has the biggest futures market for the commodity. Malaysia has two palm oil futures products, namely the ringgit-based FCPO contract and the US dollar-denominated FUPO contract.
Dalian Commodity Exchange senior manager Wang Yun Tao told Business Times that he sees ICDX's move as a logical and positive development. "We have heard about ICDX's plans and we understand this development is based on market needs. We view this as healthy competition as there is unlikely to be much negative impact in the short term," Wang added.
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