KUALA LUMPUR: Bursa Malaysia Derivatives Bhd has completed the first physical delivery of its east Malaysia crude palm oil futures contract (FEPO) in Sabah on Feb 17, 2022.

       In a statement, it said the delivery saw a total of eight 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 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,” Bursa Malaysia Derivatives chief executive officer Samuel Ho Hock Guan said.

       “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,” he added.

       The FEPO contract, which went live on Oct 4, 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, Bursa Malaysia Derivatives said.

       It said the “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.

       From its launch date to Feb 8, 2022, Bursa Malaysia Derivatives recorded a total trading volume of 3,250 contracts which is equivalent to 81,250 tonnes of CPO.