In a significant move to expand the breadth of its commodity offerings and enhance global accessibility and interest in Malaysian derivatives market, Bursa Malaysia Derivatives Berhad today commenced trading of the Bursa Malaysia DCE Soybean Oil Futures contract.
This follows the agreement signing between Bursa Malaysia Derivatives and Dalian Commodity Exchange (“DCE”) for the licensing of soybean oil futures settlement price announced in November 2023.
The FSOY contract marks the first non-palm-based edible oil futures contract to be listed on Bursa Malaysia Derivatives, the operator of the world’s most liquid crude palm oil futures contract. DCE, on the other hand, operates the world’s most liquid soybean oil futures contract. 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.
Datuk Muhamad Umar Swift, Chairman of Bursa Malaysia Derivatives and Chief Executive Officer of Bursa Malaysia Berhad said, “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.
A spokesperson of Dalian Commodity Exchange said, “The launch of FSOY is a pragmatic outcome of cooperation that 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.
As the world’s largest importer of soybeans and the largest consumer of soybean oil, China has been instrumental in driving the development of the soybean oil complex within the global derivatives market. In 2023, the DCE Soybean Oil Futures Contract remains the most traded soybean oil futures contract worldwide with 204 million contracts traded.
FSOY is a United States Dollar (“USD”)-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 USD, and rounded to the nearest USD 0.25. This adjustment allows international traders and exporters of physical soybean products to China to effectively hedge their price risk using the contract.
