KUCHING, Sept 6 — The Malaysian palm oil industry had shown resilience in the first half of 2023, with benchmark crude palm oil (CPO) price standing robust at RM3,900 per metric tonne average throughout the year under review.

According to Bursa Malaysia Berhad chairman Tan Sri Abdul Wahid Omar, this demonstrated the industry’s adeptness at navigating challenges, while maintaining its competitive edge.

He said despite the looming El Nino phenomenon, which could affect production next year, the country’s estimated production of 19 million tonnes of palm oil this year might just surpass the 18.45 million tonnes recorded last year.

"This is further supported by the recent Malaysian Palm Oil Board (MPOB) report, which highlighted a 15.55 per cent rise in exports and 11.21 per cent surge in production in July, surpassing market expectations.

"Meanwhile, palm oil stocks at the end of July 2023 reached approximately 1.73 million metric tonnes, marking a third consecutive monthly increase as reported by the MPOB,” he said in his welcoming speech for the ‘Second East Malaysia Palm and Lauric Oils Price Outlook Conference and Exhibition’ (EMPOC) 2023 here yesterday, where Premier Datuk Patinggi Tan Sri Abang Johari Openg officiated at the event.

On the global front, Abdul Wahid said the United Kingdom’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in March 2023 carried strategic significance as the move opened the door to immense potential by eliminating tariffs on Malaysian palm oil imports, allowing industry players to capitalise on opportunities arising from expanded market access and increased exports to the United Kingdom and fellow CPTPP member countries.

Nevertheless, he cautioned market participants to remain vigilant in light of the increasingly unpredictable weather conditions, potential changes to global trade and environmental, social and governance (ESG) policies, as well as the ongoing geopolitical risks, all of which had the potential to significantly impact the palm oil trade.

"Looking ahead, the exchange-traded derivatives will continue to play a pivotal role by providing commodities producers and consumers with the essential tools to manage price risk and protect portfolio values, especially during periods of market volatility.

"Particularly significant within sectors like agriculture, where prices are susceptible to swift fluctuations due to variables such as weather conditions and geopolitical events, the derivative products enable producers to lock in future prices for their goods, ensuring revenue stability,” he added.

According to Abdul Wahid, the well-established Crude Palm Oil Futures (FCPO) contract offered by Bursa Malaysia Derivatives plays a significant role in providing liquidity and transparency via an exchange-traded marketplace.

The FCPO offers standardised contracts and access to historical data, all of which contribute to supporting well-informed decision-making among market participants.

"Being the global price benchmark for the crude palm oil market has resulted in Bursa Malaysia Derivatives’ notable performance, with a total of 19.1 million contracts traded across all products in 2022, marking a 3.8 per cent year-on-year increase.

"The trading volume of the global benchmark FCPO, on the other hand, reached an exceptional 16.2 million contracts during the same period, surpassing previous record highs,” he said.

More recently, Abdul Wahid noted that the exchange achieved a new high for its T+1 After-Hours or Night Trading Session, at a volume of 21,210 contracts traded on August 24 this year, surpassing the previous high of 19,065 contracts on December 1, 2022.

"Most of these after-hours trading was for the FCPO contract. This highlights the importance of the T+1 Trading Session in offering market participants the flexibility to manage price risks during the US and the EU (European Union) market hours,” he said.

Abdul Wahid also said these results earned Bursa Malaysia Derivatives the recognition of ‘Exchange of the Year for Commodities’ and ‘Exchange of the Year for Sustainability’ at the FOW Asia Capital Markets Awards 2022.

"While these accolades affirm our position as a leading commodities marketplace in Asean, with ‘green offerings’, we remain dedicated to the progress and pursuing developments that could open up more opportunities for investors and traders.

"This commitment is very much aligned with our mission of ‘creating opportunities and growing value’,” he added. — Borneo Post Online