Grain News

CME Group Expands OTC Ag Offering With U.S. Dollar-Denominated Palm Oil Swap

Date Posted: May 20, 2013

Singapore/Chicago—CME Group, the world's leading and most diverse derivatives marketplace, announced May 20 it has expanded its centrally cleared, over-the-counter (OTC) agricultural swap offering through the introduction of a new U.S. dollar (USD)-denominated palm oil swap.

Pending CFTC review, the new USD Malaysian Crude Palm Oil Calendar Swap will be available for clearing on CME ClearPort on June 3, and will be listed with and subject to the rules and regulations of the CBOT.

“Unlike other agricultural commodities that are harvested once a year, palm oil and its associated refined products are produced continuously here in Asia, ensuring the need for ongoing risk management against price swings associated with demand and supply fundamentals,” said Nelson Low, Executive Director, Commodity Products, CME Group.

“We’re introducing these calendar swaps in response to customers in Singapore, Malaysia and around the world, who are looking for additional tools to manage counterparty risk in their underlying cash positions in crude palm oil.”

The USD Malaysian Crude Palm Oil Calendar Swap is based on prices from Bursa Malaysia Derivatives’ (“BMD”) Crude Palm Oil futures contract (“FCPO”).

“BMD’s FCPO is the global price benchmark for palm oil, and together with crude palm oil options contract listed last year, BMD has provided a comprehensive suite of exchange-traded crude palm oil products.

"The OTC clearing for the new USD Malaysian Crude Palm Oil Calendar Swap contract complements the palm products offered by BMD and we expect greater palm liquidity for both exchanges arising from this CME Group initiative,” said Chong Kim Seng, Chief Executive Officer of BMD.

For more information, call 312-930-3434.

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