Crude Palm Oil and Palm Olein Calendar futures track the average prices for palm oil/olein. This allows producers, processors and end-users in an industry characterized by continuous production and processing, to more effectively manage the price risk they are exposed to on a daily basis.
Complementing the existing benchmark oilseed products available on CME Globex, including CBOT Soybean Oil and BMD Crude Palm Oil (FCPO), the addition of Palm Oil Calendar futures and options provides customers with enhanced hedging opportunities on a single hub.
Key Features
- Access through existing FCM relationship
- U.S. dollar- denominated and cash-settled
- New spreading opportunities with benchmark CBOT Soybean Oil futures and options
- Reduced capital requirements due to cross-product margin efficiencies
- Financial integrity of CME Clearing
Malaysian Crude Palm Oil Calendar Futures
Based on the global benchmark Bursa Malaysia Derivatives (BMD) Crude Palm Oil futures (FCPO), the Palm Oil Calendar futures contract complements the palm products offered by BMD on the CME Globex platform. It replicates the risk coverage of CME Group’s popular Calendar Swaps, in a futures contract that can be accessed through an existing FCM relationship.
Malaysian Crude Palm Olein Calendar Futures
Palm Olein Calendar futures provides exposure to a cash-settled palm olein market, an advantage for those who are unable to take physical delivery. The contract also offers an alternative to trading the physically- delivered FOB Port Klang/Pasir Gudang (PK/PG) paper olein market, while mitigating counterparty default risk. Palm oil refiners can combine Palm Olein Calendar futures and Palm Oil Calendar futures to lock in a portion of their refining margin, particularly important in the far forward months when the management of counterparty risk exposure is so critical owing to the long time horizons involved.
Average Price Options on Palm Oil Futures
With multiple strikes and maturities, options offer additional flexibility and precision, allowing market participants to better tailor their risk management strategies to their specific needs. Options can also be less margin- intense than futures during periods of heightened volatility.
USD-denominated Malaysian Crude Palm Oil Calendar Futures (CPO)
USD-denominated Malaysian Palm Olein Calendar Futures (OPF)
USD Malaysian Crude Palm Oil Average Price Option (POO)
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All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
