Futures and options exchange Bursa Malaysia Derivatives (BMD) has launched a revamped crude palm kernel oil futures (FPKO) contract today.

“The palm kernel physical market has seen considerable growth over the years and has established itself as one of the region’s most important commodities,” BMD said.

“In addition, the FPKO contract will serve as a tool for lauric oil industry players to hedge their portfolio risk and enables transparent price discovery for palm complex market players.”

The new contract would offer an effective hedging instrument against the physical market and provide an alternative instrument for local and international participants to trade, the exchange added.

BMD CEO Samuel Ho said after multiple industry consultations, enhancements were to the contract covering five areas including contract grade, delivery points, daily price limits, speculative position limits and the imposition of traceability document requirements.

A wholly-owned subsidiary of Bursa Malaysia Berhad, BMD also offers a crude palm oil futures contract (FCPO) which acts as the global price benchmark for CPO.

The new FPKO contract will be made available to traders from 8 March.