Bursa sees strong palm futures trade

KUALA LUMPUR: Stock exchange operator BURSA MALAYSIA BHD [] expects the trading volume of its palm oil futures contract (FCPO) to grow by at least a third this year, helped by increased visibility on the world's largest derivatives exchange, a top executive said.

Bursa Malaysia is in the process of transferring its derivatives contracts currently traded on an in-house platform onto CME Group Inc's Globex platform.

Trading of FCPO, the global benchmark price for palm oil, grew by 33% to four million contracts in 2009, Bursa's chief executive Datuk Yusli Mohamed Yusoff told Reuters in an interview.

A bumper South American soy crop, recovering global demand and the resurgent El Nino weather condition will be some of the factors driving Southeast Asian palm oil markets in 2010.

"We expect more interest in our contracts, not just from buyers and sellers but from people who want to take positions to speculate on the price of palm oil," said Yusli ahead of Bursa Malaysia's Palm and Lauric Oils Conference next week.

The event, which kicks off on March 8, brings together industry analysts, global vegetable oil traders and PLANTATION [] firms for three days. The stock exchange operator expects its derivatives offerings to begin trading on the CME Globex platform in the second half of the year.

"Over time, we will be working with CME to identify what other products should be developed for our market," he said.

Last year, CME Group bought a 25% stake in Bursa Malaysia's derivatives unit and said it planned to develop a US dollar FCPO using settlement prices of Malaysia's ringgit contracts for trading on one of CME's platforms.

Turning to the share market, Yusli said "20 or so" new listings, mostly by local companies, are expected to hit the market in the coming months.

"Assuming market conditions stabilise, we hope to see most, if not, all of them coming into the market in the next few months," he said.

Bursa is aiming for slightly more revenue than last year's RM402 million but profits will likely be flat due to rising costs.

"Our expectations are that it will be better than last year's but how much better will depend on factors like getting foreign investors back," he said.

About US$54 million (RM181.98 million) of foreign portfolio funds left the country in January after December's net outflow of US$77 million, according to CIMB Research. — Reuters