FGV, Dalian Commodity Exchange to expand palm oil futures regionally

FGV chairman, Datuk Wira Azhar Abdul Hamid said FGV would be able to work with DCE to grow beyond China and to support its plans to accelerate the process of delivering physical palm oil to buyers.

KUALA LUMPUR: FGV Holdings Bhd and China's Dalian Commodity Exchange (DCE)  will work together to expand palm oil futures delivery regionally.

In the MoU signed on Wednesday, FGV said  DCE – the world’s largest agriculture, plastics, coal, iron ore futures bourse -- aims to increase cooperation with palm oil companies in the Belt and Road countries.

The MoU focuses on services offered by FGV subsidiary Felda Johor Bulkers Sdn. Bhd (FJB). FJB has extensive experience in the bulking business with over 860,000 tonnes of total liquid storage
capacity across its terminals in Malaysia, Indonesia and Pakistan. 

“FGV is also required to provide support for DCE’s research in the palm oil futures and spot markets in Malaysia and Indonesia, as well as promote bilateral cooperation between
the two parties. 

“The collaboration will potentially contribute an estimated RM 1.5mil in revenue, with profitability of RM 525,000 per month, based on throughput projection of 50,000 tonnes,” they said in a joint statement.

FGV has the world's largest bulking and storage facilities for vegetable oil.

As for DCE, it has a total of 16 futures contracts listed for trading that includes a variety of agricultural and industrial produce. 

As at the end of 2017, DCE had 165-member firms and 3.09 million investor accounts, including 89,300 corporate accounts. DCE had 280 designated delivery warehouses and 14 margin depository banks.

FGV chairman, Datuk Wira Azhar Abdul Hamid said FGV would be able to work with DCE to grow beyond China and to support its plans to accelerate the process of delivering physical palm oil to buyers.
“
Through FGV’s subsidiary, FGV China Oils Ltd (FGVCO), this collaboration is also set to be a catalyst to unlock more potential collaborations in other related industries in China, and B2B ventures, to expand its palm-based business operations in the region,” he said.

FGVCO is based in Dongguan City and is involved in the operation of palm oil refineries, edible oil storage and trading, and the production and sales of palm oil, palm-industry related products.

FGVCO can compete in the China market as it has a reliable supply of palm oil and its derivatives from the FGV Group, licences for the handling of all types of oils including soybean, rapeseed and in-house research & development capabilities to provide technical and product innovation.

DCE executive vice president Zhu Lihong said the exchange was the first to introduce the commodity options in mainland China and launch the internationalisation of a domestic mature futures product.

“Successfully transforming from a single and closed commodity futures exchange to a diversified, open and comprehensive derivatives exchange, DCE has started a new journey of building itself into a world-class derivatives exchange and a global commodity pricing centre and risk management centre,” he said.