KUALA LUMPUR (March 21): Bursa Malaysia Derivatives Bhd posted an all-time high in daily open interest for its benchmark price-setting crude palm oil futures (FCPO), indicating bullish sentiment for CPO prices.

In a statement, the exchange announced that the FCPO open interest reached an all-time high of 299,190 contracts last Thursday (March 14), surpassing the previous high of 287,859 contracts recorded about 10 years ago in September 2014.

The surge in open interest comes despite the fact that Indonesia last year launched its own CPO futures exchange to rival Malaysia and the CIF Rotterdam benchmark in the Netherlands.

Open interest refers to the total number of outstanding futures or options contracts at the end of a trading day, indicating market sentiment and the momentum behind price trends.

"The rising open interest in FCPO since mid-February 2024 reflects increased market participation, in part driven by the recent positive outlook on CPO prices," said the derivative exchange.

It added that the positive market sentiment for FCPO was further reinforced by industry insights and analyses presented at Bursa Malaysia’s 35th Palm & Lauric Oils Price Outlook Conference and Exhibition.

During the conference held earlier in March, analysts such as Thomas Mielke and Dorab Mistry shared their projection that palm oil production in Malaysia would remain unchanged, while palm oil production in Indonesia would see a slight decline in 2024.

As such, they held a relatively bullish outlook for palm oil prices in the near term.

Malaysian FCPO closed at a one-year high last Tuesday, as the benchmark third-month contract increased by RM66 or 1.6% to close at RM4,195. The performance was buoyed by strength in rival edible oils and firmer crude oil prices, the exchange added.

Meanwhile, the combined open interest for all products also charted an all-time high of 360,132 contracts, exceeding the previous high of 346,403 contracts in February 2020.

Bursa Malaysia Derivatives director Mohd Saleem Kader Bakas remarked that the performance has reaffirmed the country’s strategic position as a global trading hub for edible oils.

“This surge, particularly in the FCPO market, amidst the dynamic shifts post-pandemic and in geopolitical landscapes, demonstrates our market’s capability to adapt and serve as a critical hub for effective price risk management,” he said in the statement.