SHANGHAI: China launched its palm oil options on the Dalian Commodity Exchange on Friday, the country’s first options contract accessible to overseas traders, but traders said they expect foreign participation to be low.

The launch comes amid volatile palm oil prices, which have been declining since the start of the month after hitting milestone highs in May amid rising output and inventories, and declining exports. Dalian’s palm olein futures have lost 11% so far this month, and fell 2.8% to a two-month low of 6,742 yuan ($1,046.16) per tonne on Friday.

Benchmark palm oil prices on the Bursa Malaysia Derivatives Exchange have shed 16% so far in June and were last down 3% at 3,277 ringgit ($791.16) per tonne.

Options gives traders the right to buy or sell a futures position at a specified price, which can help them manage their price exposure.

“The options trading volume is about 3% of the total futures volume, which is good for the first trading day,” said James Wang, vice president of Singapore-based brokerage Straits Financial, which participated in the trading on Friday.