Bursa Malaysia relates to the Wall Street Journal, that foreign investors currently account for 40% of trading in Malaysian palm oil futures, compared with 25% in 2010, a fact indicative of global interest in trading in palm oil increasing as a result of growing consumption, demand, and its correlation to other commodities on the market.<\/p>\n
Between the years of 2010 and 2014, global palm oil production increased by 20% and consumption rates paralleled this growth according to the U.S. Department of Agriculture (USDA), increasing market competition with other edible oils such as rapeseed and soyoil.<\/p>\n
Overall trade in Bursa\u2019s global benchmark crude palm oil futures hit 10 million lots last year \u2013 an increase of two and a half times that of 2010 volume. And in the first two months of 2015 alone, trade hit almost 2 million lots.<\/p>\n
Participation from U.S. and European traders grew after the CME Group acquired a 25% stake in Bursa Malaysian Derivatives in 2009, allowing the Malaysian derivatives to be traded on the Globex trading platform.\u00a0 However, attracting foreign investors is also the fact that palm oil and soyoil trade in a relatively correlative fashion as the two are substitute products for each other, making palm oil an indicator of the soyoil market – and both trade in correlation to crude oil, as palm oil is used in its alternative, biodiesel. These correlations, and palm oil\u2019s recent volatility also give traders the opportunity to seize advantage when these commodities occasionally trade out of sync.<\/p>\n
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