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BMD On Defensive Mode

KUALA LUMPUR: Malaysia’s regulatory officials and its global partners in the East and West sought to highlight and reinforce Bursa Malaysia Derivatives’ (BMD) price-setting and discovery role for crude palm oil (CPO) prices.

This guarded defensive tone by the country’s top officials and its partners was heard during the annual Palm and Lauric Oils Conference and Exhibition (POC 2023) as the world’s largest crude palm oil producer Indonesia signals its intent to soon establish its own benchmark pricing for the commodity.

The BMD underscored its key role as being the global hub for CPO price discovery, and BMD’s global partners, which are major financial derivatives exchange operators from the United States and China – the CME Group and the Dalian Commodity Exchange respectively – had reaffirmed their commitment with BMD.

The two global derivatives exchange operators had specifically acknowledged Malaysia’s role in this area and their intention to continue collaborating with the country on this front.

The government, through the Plantations and Commodities Ministry, had at the event also sought to highlight Malaysia’s global price benchmark role for CPO and highlighted key sustainability initiatives in these areas as well.

Indonesia’s plan to have its own CPO price benchmark appears to have been simmering for some time, and flared up in January when the republic officially announced plans to move ahead with its pricing plans.

Indonesia’s Trade Minister Zulkifli Hassan said the issue of referring to Malaysia’s CPO prices, despite being the biggest palm oil producer, had been raised in their cabinet meeting several times.

In his speech at the opening of the POC 2023, Bursa Malaysia chairman Tan Sri Abdul Wahid Omar highlighted new products with key features and the exchange’s accomplishments in this area.

“For the first time in its history, CPO prices breached RM8,000 per tonne in March 2022, before retreating to RM3,400 in September.