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Futures and options exchange Bursa Malaysia Derivatives Berhad has announced it is now trading soyabean oil futures.

The launch of the Bursa Malaysia DCE Soybean Oil Futures (FSOY) contract followed an agreement between the exchange and Dalian Commodity Exchange (DCE) for the licensing of soyabean oil futures settlement price that the companies announced in November.

Bursa Malaysia Derivatives said the FSOY contract marked the first non-palm-based edible oil futures contract to be listed on the exchange.

The relative prices of palm and soyabean oils - the two most widely consumed edible oils - were important for market players, particularly food manufacturers, as the oils were frequently used interchangeably as recipe ingredients, the exchange said on 18 March.

“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,” Muhamad Umar Swift, chairman of Bursa Malaysia Derivatives and CEO of Bursa Malaysia Berhad, said.

“In addition to our existing futures contracts, market participants can now leverage FSOY as a risk management tool to hedge against price fluctuations in times of market volatility and evolving complexities of international markets.”

FSOY is a US dollar (US$)-denominated cash-settled contract, with the final settlement price calculated based on the DCE Soyabean Oil Futures Contract’s one-off delivery settlement price on DCE’s 10th trading day of the delivery month. The price is then adjusted for conversion from Renminbi (CNY) into US$ and rounded to the nearest US$0.25.

The adjustment allowed international traders and exporters of physical soyabean products to China to effectively hedge their price risk using the contract, Bursa Malaysia Derivatives said.

Available for trading during morning and afternoon trading sessions, every Monday to Friday from 9am to 6pm (Malaysia Time), the FSOY is also available during After-Hours (T+1) trading session, every Monday to Thursday from 9pm to 11:30pm (Malaysia Time).

A DCE spokesperson said the FSOY “enriched the tools available for global oils and fats industry chain participants to manage price risks and strengthened connections between the two countries’ futures markets”.

As the world’s largest importer of soyabeans and the largest consumer of soyabean oil, China had led the development of the soyabean oil complex within the global derivatives market, Bursa Malaysia said. In 2023, the DCE Soybean Oil Futures Contract remained the most traded soyabean oil futures contract worldwide with 204M contracts traded.