KUALA LUMPUR: Bursa Malaysia Derivatives Bhd has completed the first physical delivery of its East Malaysia crude palm oil futures contract (FEPO) in Sarawak last Friday (June 10).

The delivery saw a total of 10 contracts, representing 250 tonnes of crude palm oil (CPO) transacted at one of the approved port tank installations (PTIs) in Bintulu, Sarawak. 

The PTI is operated by Biport Bulkers Sdn Bhd, a wholly-owned subsidiary of Bintulu Port Holdings. 

Bursa Malaysia Derivatives chief executive officer Samuel Ho said the FEPO aims to help physical players and participants in the East Malaysia palm oil market to manage price risk, particularly in a highly volatile environment.

"I am delighted to see the first successful physical delivery in Sarawak, which demonstrates the industry's recognition of FEPO as a platform for alternative price discovery in East Malaysia," said Ho.

The CPO Futures markets have seen increased participation due to the recent price volatility in palm oil.

On May 6, the FEPO contract reached a new daily trading volume high of 186 contracts, equivalent to 4,650 metric tonnes of CPO.

Bintulu Port chief executive officer Datuk Mohammad Medan Abdullah said the first physical delivery marked a new milestone for Biport Bulkers Sdn Bhd.

Medan said as the biggest palm oil terminal in Sarawak, Biport Bulkers handled more than 91 per cent of the total palm oil export in Sarawak and 24 per cent of the total Malaysian palm oil export.

"The expansion of services and facilities that we offer to all palm oil traders in East Malaysia will contribute to the growth of Sarawak and Sabah market share as key palm oil producing and exporting states in Malaysia," he said. 

Bursa Malaysia Derivatives is the first exchange in the world to offer physically delivered commodity derivatives contracts with sustainable requirements mandated for delivery. 

All physical deliveries made under its crude palm oil futures and FEPO contracts must be sourced from palm oil mills that meet the Oil Palm Management Certification under the Malaysian Sustainable Palm Oil certification scheme's requirements. 

These commitments are in line with the exchange's efforts to foster sustainable development through its product offerings and across the entire value chain.