Workers at the approved Port Tank Installation with signs commemorating the completion of Bursa Malaysia Derivatives' first FEPO Physical Delivery in Sabah.
Kuala Lumpur, 28 February 2022 – Bursa Malaysia Derivatives Berhad (“Bursa Malaysia Derivatives” or “the Exchange”) has successfully completed the first physical delivery of its East Malaysia Crude Palm Oil Futures Contract (FEPO) in Sabah last Thursday, 17 February 2022.
The delivery saw a total of eight (8) contracts, representing 200 metrics tonnes of Crude Palm Oil (“CPO”) transacted between the seller, Green Edible Oil Sdn Bhd, and the buyer, Kunak Refinery Sdn Bhd at one of the approved Port Tank Installations in East Malaysia, namely in Sandakan, Sabah. The Port Tank Installation is operated by Sawit Bulkers Sdn Bhd, a wholly owned subsidiary of Sawit Kinabalu Group, which is the premier investment arm of the Sabah state government in the oil palm industry.
“The successful and orderly completion of the first physical delivery for FEPO contracts demonstrates the demand from Sabah producers to sell their CPO through an alternative platform with greater price transparency,” said Samuel Ho Hock Guan, Chief Executive Officer of Bursa Malaysia Derivatives. “Our FEPO contract benefits Sabah refiners and buyers by allowing them to source CPO at competitive pricing. It also enables them to manage price risk and hedge against unfavourable price movement in the physical market, especially during the low-supply season.”
“The availability of Bursa Malaysia Derivatives’ FEPO Contract provides East Malaysia market participants with an additional trading opportunity, as well as an improved price discovery mechanism and more physical delivery options in Sabah and Sarawak. As one of the designated delivery ports in Sabah, we hope to attract more market participants to lease out our available tanks, and further increase the visibility of the East Malaysia palm oil market,” said Datuk Bacho Jansie, Group Managing Director of Sawit Kinabalu Group.
The FEPO contract, which went live on 4 October 2021, provides East Malaysia CPO market participants a new avenue to engage in physical deliveries and hedge their positions in the physical CPO market. It also strengthens Bursa Malaysia Derivatives’ Palm Complex offerings
and provides price transparency in the East Malaysia CPO market, further cementing Malaysia's position as the global centre for palm oil price discovery.
“Sell & Deliver” is one of FEPO's key value propositions for palm oil producers, which enables sellers to discover alternate selling prices via the Exchange, in addition to the industry’s conventional average price. Sellers can then choose to offload their CPO at one of the approved Port Tank Installations in Sandakan, Lahad Datu, or Bintulu. In addition, all physical CPO deliveries made under the FEPO contract must be sourced from Palm Oil Mills that meet the Oil Palm Management Certification (OPMC) under the Malaysian Sustainable Palm Oil (MSPO) Certification Scheme's requirements.
From its launch date to 8 February 2022, Bursa Malaysia Derivatives recorded a total trading volume of 3,250 contracts which is equivalent to 81,250 metric tonnes of CPO. Its highest daily trading volume was recorded on 5 January 2022 at 122 contracts representing 3,050 metric tonnes of CPO.
