Singapore is set to launch crude palm oil futures contracts by the end of 2006, trading palm oil of Indonesian origin on the Joint Asian Derivatives Exchange, an industry official told Reuters on Friday.
The electronic JADE is a joint venture between the Chicago Board of Trade and the Singapore Exchange. It launched its first rubber contract on September 25 in what organisers said was only the beginning in a drive to capture the Asian hedging market.
"We see that Indonesia is a very important producer of palm oil and will become even more important in the years to come," said Nelson Low, Jade's vice-president for product and business development. Low gave no details on the point of loading but trade sources said the palm oil contracts would be on a free on board basis at the ports of Begawan and Dumai in Sumatra.
Jade's palm oil futures, which will be denominated in dollars, will compete with the ringgit-denominated palm oil contracts in Malaysia seen as the benchmark for the commodity, said dealers. After years in the doldrums, palm oil futures are now generating increasing interest as governments pursue plans to use palm oil for fuel.
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