Palm | Kelapa Sawit

Following is a list of events in Malaysia as well as news stories and press reports which may
influence financial markets. Reuters News welcomes your feedback and for any queries, please
contact the Kuala Lumpur newsroom at +603 2333 8046 or via email at areuters@gmail.com        
   
 WHAT IS HAPPENING IN MALAYSIA, TIMES LOCAL FOLLOWED BY GMT:   
(The inclusion of diary items does not necessarily mean that Reuters will cover the event).   
> Maybank holds annual general meeting, Crowne Plaza Mutiara Kuala Lumpur, 10.00am, (0200).    
> Bursa Malaysia holds annual general meeting, Sime Darby Convention Centre Kuala Lumpur,
10.00am (0200).   
> JAKS Resources Bhd holds annual general meeting at Kelab Golf Sultan Abdul Aziz Shah, Shah
Alam at 1030am (0230).     
> Malaysia Airports Holdings holds annual general meeting at Pan Pacific KLIA Hotel, Sepang at
1100am (0300).    
> Parliament in session.   
               
  MARKET SNAPSHOT:   
* Malaysia's benchmark stock index lost 0.3 percent on Wednesday, led by declines in builder MMC
Corp and the country's No.2 palm oil firm IOI Corp.    
* U.S. stocks declined on Wednesday as sliding oil and metals prices gave investors a reason to
sell commodity-related shares.     
* Oil prices fell on Wednesday as the U.S. and some European governments mulled the release of
strategic oil reserves, while commodity-related shares weighed on global equities. U.S. stocks
closed weaker, though far from the day's lows, in the wake of economic data that was slightly
below expectations.    
* Malaysian palm oil futures closed down on Wednesday as traders booked profits from a one-year
high hit the previous day, although losses were limited by news of larger food imports by China
and soybean crop damage in South America.    
* To see Malaysian central bank regular money market tenders issued at around 0930 local please
click on the following link here   
* For a political risk box on Malaysia, click here
    
* For Asian weekly risks, click on r.reuters.com/jum59n   
       
IN THE NEWS REUTERS MALAYSIA (Click on )   
> West's energy firms await more reforms in Myanmar                
> State-run Thai bank says hopes to launch debut sukuk in 2 mths
> Australia open to U.S. spy flights from Indian Ocean island      
   
                                                                         
 ----------------------MARKET SNAPSHOT @ 0009 GMT ------------
                     INSTRUMENT   LAST       PCT CHG   NET CHG
 S&P 500                          1405.54     -0.49%    -6.980
 USD/JPY                          82.8         -0.1%    -0.080
 10-YR US TSY YLD                 2.214           --     0.013
 SPOT GOLD                        1663.84      0.04%     0.720
 US CRUDE                         105.65       0.23%     0.240
 DOW JONES                        13126.21    -0.54%    -71.52
 ASIA ADRS                        129.51      -0.55%     -0.72
 -------------------------------------------------------------           

    
   
*  For an outlook of Asian stock trading, click on    
*  Most emerging Asian currencies slid on Wednesday, pressured by quarter-end dollar demand from
companies in the region, with the rupee coming under additional pressure as traders grew more
pessimistic about further foreign fund inflows.
*  Most Southeast Asian stock markets edged down on Wednesday in moderate volumes looking for
more clues in the economic data from the U.S. after rallying on hopes of further stimulus from
the Federal Reserve.


http://www.reuters.com/article/2012/03/29/malaysia-factors-idUSL3E8ET00H20120329

JAKARTA: Indonesia's new commodities exchange yesterday said it plans to launch a crude palm oil (CPO) futures contract in April, marking the second attempt to create a local benchmark price in the world's top grower.

PT Bursa Komoditi & Derivatif Indonesia, the new commodities and derivatives exchange (ICDX), said it hopes to succeed after rival Jakarta Future Exchange, known as BBJ, struggled to attract planters to trade CPO.

Instead, the industry uses Malaysian palm oil futures and the Europe spot price in Rotterdam as benchmarks.Indonesia wants a local benchmark which it feels will provide a better reflection of local supply and demand, and will eliminate currency risk factors.

Laren Tan, chief operating officer of ICDX, said in an interview that recruiting as many members as possible for the exchange was the key to boosting trade. He said companies that have already agreed to trade on the new exchange included the local unit of Wilmar International, Sinar Mas Agro Resources Tbk, Sampoerna Agro, Duta Palm, and Palm Mas Asri.Brokerage firm Millenium Penata Futures, and Sinarmas Futures have also joined, he said, while Indonesia's biggest listed plantation firm, PT Astra Agro Lestari, has said that it may join.

"A lot of people have shown interest at different levels. Based on our meetings, most of them are positive about the plan," said Tan, who is a former executive director at Bursa Malaysia Derivatives Exchange, the Malaysia exchange where palm oil futures are traded.

BBJ launched physical palm oil trading in June 2009, hoping that Indonesia's state firms will commit to selling 500,000 tonnes of their output via the exchange, a level set by the state enterprises minister at that time. But it failed to set a benchmark as it got only a poor response from palm oil producers, resulting in poor liquidity.

BBJ's president director, Hasan Zein Mahmud, said that after six months, only 29,000 tonnes of palm oil were traded at BBJ, just a fraction of Indonesia's palm oil production of about 21 million tonnes in 2009.

The exchange will introduce spot and futures contracts for one to 12 month, and each of the four quarters of the following year. Members would have to pay security deposits of two billion rupiah (100 rupiah = RM0.04). Indonesia is also a leading supplier of other commodities including coal, tin, cocoa and coffee but plays almost no role as an exchange for these products, so traders have always used contracts traded outside the country as the benchmark for prices. - Reuters

Bursa Malaysia is looking to offer fee rebates to futures brokers in an effort to generate more liquidity in the local derivatives market.

"We'll submit a market-makers programme to the Securities Commission (SC) for approval," said Bursa derivatives acting general manager K. Sree Kumar.

"One of the incentives include a fee rebate to liquidity providers," he told reporters after presenting a paper on "Internationalisation of Malaysian Palm Oil: Challenges and Opportunities" at the PIPOC 2009 in Kuala Lumpur yesterday.

Earlier in the year, Bursa said it will step up efforts on market-making, having seen thin trade of the US dollar-denominated crude palm oil futures, known as FUPO, since its launch in September 2008.

Market-makers refer to futures brokerages and banks that accept risks by quoting both buy and sell prices in futures contracts, hoping to make a profit on the turn or the bid/offer spread.
There are now about 20 licensed futures brokerages facilitating palm oil trading on the Bursa Malaysia Derivatives market.

"We'll also hold discussions with traders, including palm oil refiners, to gain direct feedback on ways to enhance participation in the derivatives market," Sree Kumar said, adding that there have been requests for monthly publication of a more meaningful classification of trades on the derivatives market. "We'll discuss this with our surveillance team," he added.

Bursa had announced two months ago that it will sell a 25 per cent stake in its derivatives unit to CME Group Inc, to help globalise trading of Malaysian palm oil futures. CME will have the right to use settlement prices for its ringgit-denominated crude palm oil (CPO) futures contract while on its part, it will develop US dollar-denominated cash-settled palm oil futures contracts and related options to trade on CME Globex, the world's most widely distributed electronic trading platform.

Sales of futures products in the US are regulated by the Commodity Exchange Act and administered by the Commodity Futures Trading Commission (CFTC). The 30.10 rules limit sales activities by those who are not members of the US exchanges, but an exemption is granted if the exchange outside the US demonstrates that its regulatory system provides equal or "comparable" customer safeguards to those in the US.

Sree Kumar confirmed Bursa is applying for the CFTC exemptions. "Once we secure exemptions from the CFTC, we will be able to market our products to US traders. Also, US commodity funds can come in and trade here," he said.

CME is scheduled to develop a US dollar denominated palm oil futures contract by the first half of 2010. In preparation, Bursa will jointly work out a business plan with CME to market that instrument. "We'll go on a roadshow with local futures brokers to promote this new instrument and existing products to traders. We'll also set up a CME Globex hub in Kuala Lumpur then," he added.

Sree Kumar said once these products are listed on CME Globex, there is a possibility that trading of Malaysian CPO futures could be extended to 22 hours. "Trading hours will most probably be extended from the current 10.30am to 6.00pm. Futures brokers will have to make this commercial decision and of course, it is also subject to the SC's approval," he added.

Trading of palm oil futures in Chicago and Kuala Lumpur will have better reach by the second half of 2010 if some restrictions are removed by regulators in Malaysia and the US.

Last month, Bursa Malaysia said it was selling a 25 per cent stake in its derivatives unit to CME Group Inc, to help globalise trading of Malaysian palm oil futures. CME will have the right to use settlement prices for its ringgit-denominated crude palm oil (CPO) futures contract while on its part, it will develop US dollar-denominated cash-settled palm oil futures contracts and related options to trade on CME Globex, the world's most widely distributed electronic trading platform.

"If Bursa Malaysia secures exemptions from the US Commodity Futures Trading Commission (CFTC), we'll be able to market Bursa Malaysia's products to American traders," said Malaysian Futures Brokers Association (MFBA) president Steven Lai Choon Lim."

Also, this will facilitate US commodity funds to come and trade in Malaysia," he told Business Times and Dow Jones Newswire in a teleconference at Kuala Lumpur yesterday.

Sales of futures products in the US are regulated by the Commodity Exchange Act and administered by the CFTC. The 30.10 rules limit sales activities by those who are not members of the US exchanges, but an exemption is granted if the exchange outside the US demonstrates that its regulatory system provides equal or 'comparable' customer safeguards to those in the US. Bursa Malaysia recently applied for the CFTC exemptions.

"Some of our members have secured approval from the Securities Commission to handle orders from overseas traders and to key in trades in overseas futures markets," Lai said.

For smoother CME Group-Bursa Malaysia collaboration, Bank Negara can liberalise rulings to facilitate resident brokers' remittance of clients' margin deposits to offshore brokers or exchanges for trading in overseas markets.

Lai does not see Bursa Malaysia's tie-up with CME Group ending like the now-defunct Joint Asian Derivatives Exchange (JADE), which was dissolved in November 2007. JADE was equally owned then by Singapore Exchange Ltd (SGX) and the Chicago Board of Trade.

"No, this collaboration is different because the trades will be matched on CME Globex in Chicago," he said. "Also, CME Group has more to gain from an established palm oil futures market in Kuala Lumpur."

The Bursa Malaysia-CME Group tie-up also means that Malaysian futures brokers will have to work harder to compete internationally. "The need to grow our business has not changed, but the trading environment will. A number of exchanges have already listed palm-related futures. We'll leverage on opportunities that will reinforce our strength," Lai said.

This following article in green is written by my colleague Adeline Paul Raj. About 18 months ago, on 1st March 2008, I wrote about the possibility of this tie-up. I'll paste that article below in blue ;-)

CME Group Inc, the world's largest derivatives exchange, will take a minority stake in Bursa Malaysia Bhd's derivatives business, officials said.

Discussions are ongoing and should be finalised in a matter of weeks, Bursa's chief executive officer (CEO) Datuk Yusli Mohamed Yusoff said. "It's a minority stake. We're still finalising the negotiations," he told reporters on the sidelines of the World Capital Markets Symposium in Kuala Lumpur yesterday.

In return, Bursa will also take a small stake in the Chicago-based CME, the latter's CEO Craig Donahue told Business Times on the sidelines of the same conference.

The two companies announced in a press statement yesterday that they were working on a collaboration involving trade matching services, product licensing and minor cross-equity investments. The deal needs regulatory approval, they said.

Yusli said the partnership is aimed at globalising the Malaysian crude palm oil (CPO) futures market. "Through this collaboration, we expect the resulting expertise and knowledge transfer to further facilitate our goal for a robust derivatives exchange," he said.

CME will use Bursa's ringgit-denominated crude palm oil futures contract (FCPO) settlement prices, which will enable CME to develop a US dollar-denominated cash-settled CPO futures contract and its related options for listing on one of CME's US registered exchanges.

The product is expected to be traded on CME's electronic trading platform, CME Globex. This means that CME's customers from other markets would be able to access Bursa's derivatives markets and products on CME Globex, which is the most widely distributed electronic trading platform in the world.

"This proposed partnership will allow us to continue to expand our transaction processing business opportunities, increase our presence in Asia as well as help our Malaysian partners grow their business," Donahue said in the statement.

Bursa's shares, which were suspended from trading for an hour in the morning pending the announcement, ended the day 2 sen lower at RM8.29.
--------------------------------------------------------------

Futures tie-up with Chicago?
MALAYSIA'S popular crude palm oil futures (FCPO) and the soon-to-be-launched US dollar palm oil futures (FUPO) may also be traded on the Chicago Mercantile Exchange in the medium term, a source said.

"Bursa is launching the direct market access very, very soon. Following that, FUPO's accessibility to foreign traders will be higher when it is launched in less than six months," the source said.

If Bursa Malaysia's palm oil futures are traded in Chicago, it will boost palm oil's popularity as a reliable and flexible hedging tool.

Malaysia is already the world's biggest palm oil exporter. Kuala Lumpur is also the world's biggest futures market for the commodity.

Earlier this week, the Chicago Mercantile Exchange co-hosted an event at the Palm & Lauric Oils Conference 2008 held in Kuala Lumpur. The majority of the participants were oil palm growers, oleochemical producers, food manufacturers, vegetable oil traders, biodiesel producers, commodity fund managers, financiers, futures brokers and dealers.

CME Group president Phupinder S. Gill, in his welcome speech to more than 1,900 delegates said, "We look forward to collaborating with Bursa Malaysia to generate trading opportunities". Also present was Bursa Malaysia chief operating officer Omar Merican.

When approached, both Phupinder and Omar declined to elaborate on the proposed collaboration.

CME Group, which clocks in daily trading volume of around nine million contracts, consists of the Chicago Mercantile Exchange and Chicago Board of Trade (CBOT). It is the world's largest derivatives exchange for grains, livestock, oilseeds, dairy and timber.

Another source said that the tie-up will not lead to another JADE, a new exchange that was meant to be equally-owned by Singapore Exchange Limited (SGX) and the CBOT. "It is more of having some of the derivatives traded on CME Globex electronic trading platform. It could be FCPO, FUPO and FKLI."

The partnership for the Joint Asian Derivatives Exchange (JADE) was dissolved in November 2007 when SGX paid S$1.14 million for the remaining stake in JADE, following CME's acquisition of the CBOT. JADE's contracts - rubber and palm oil futures - were transferred to the SGX derivatives platform.

When JADE was launched in September 2006, it used the Chicago exchange's electronic platform and clearing was done by the SGX. It listed its first product, a rubber futures, in September 2006. Later in June 2007, it launched the US dollar denominated crude palm oilfutures. The physically-settled contract was created to compete with the global benchmark FCPO contract listed on Bursa Malaysia.