Contract for Palm Oil

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Contract for Palm Oil Powered By Docstoc
					                 Trading in
               Crude Palm Oil




• Introduction to Crude Palm Oil

• Statistics

• Contract Information

• Trade Participants in the Region

• Trade Associations




                                     1
 Introduction to Crude Palm Oil




   Crude palm oil is extracted from the fruits of the
              Elaeis guineensis tree.




  Introduction to Crude Palm Oil



                                                                     10° N
                                                                     Equator
                                                                     10° S




• Optimal temperature               24 – 32 °C

• Optimal rainfall                  1,800 – 2,000 mm p.a.

• Indonesia & Malaysia constitute 85% of world palm oil production




                                                                               2
              Introduction to Crude Palm Oil
    • Archeologists discovered remnants of palm oil in ancient
      Egyptian tombs dating back to 3000 B.C.

    • Palm oil were first introduced to Southeast Asia in 1848 with
      four seedlings planted in the botanical gardens at Bogor, Java.

    • Fruits of the palm oil that descended from these seedlings
      have higher yields, partly as a result of geographical location.

    • Agricultural engineer, Adrien Hallet, and his friend, Henri
      Fauconnier, capitalised on this and pioneered the growth of
      the palm oil industry in Indonesia and Malaysia.




          Introduction to Crude Palm Oil
•    Tree takes on average 3 years to reach maturity.

•    Reaches maximum productivity between 6-10
     years when thereafter, yield declines.

•    Productive life of an oil palm tree continues for 20-
     30 years after maturity.

•    Fruits come in form of a bunch (fresh fruit bunch or
     FFB) and weighs 10-25 kilos each. Each FFB
     contains 1,000-3,000 individual fruits.

•    Tree can produce up to 20 tonnes of fruit bunches
     annually




                                                                         3
  Introduction to Crude Palm Oil
  Plantations                      CPO Mills
   Fresh Fruit                   Separation of
     Bunch                      palm kernel and
 harvested from                extraction of CPO
    oil palms




                  End Users                          CPO Refineries
              Further processing                     Refining of CPO
                 into palm oil                         into refined,
                   products                           bleached and
                                                    deodorized palm oil
                                                        (RBDPO)




  Introduction to Crude Palm Oil
                                     •   Cooking oil
                        Edible       •   Margarine
                       Products      •   Specialty fats
                                     •   Fats for bakery products




Palm Oil                                                      •     Lubricants
                                              Oleo-           •     Softening agents
                                                              •     Vulcanizing agents
                                             Chemical
                                                              •     Fatty acids oil
                                                              •     Cosmetics

                      Non-Edible
                                                Soap
                       Products


                                             Bio-fuels

                  Major End Uses of Crude Palm Oil




                                                                                         4
         Introduction to Crude Palm Oil

              Resources                          Products                            Markets


           Sugar & starch                           Ethanol
              plants
          e.g. sugar, beetroot,                                                 Power generation &
                  corn                                                          transportation fuels
                Oil crops
        e.g. oil palm, soybean,                   Bio-diesel
                rapeseed



                                           The Bio-fuels Market




         Introduction to Crude Palm Oil
• Biodiesel is produced through the
  reaction of a vegetable oil (e.g.: palm
  oil) with methyl alcohol or ethyl alcohol
  in the presence of a catalyst*.

• Chemical       process   is  called
  transesterification which produces
  biodiesel and glycerin.

• Chemically, biodiesel is called methyl
  ester if the alcohol used is methanol
  but if ethanol is used, it is called ethyl
                                                                             Transesterification Process
  ester. Both are similar but methyl
  ester is cheaper due to lower cost for
  methanol
* Commonly used catalysts are potassium hydroxide (KOH) or sodium hydroxide (NaOH)




                                                                                                           5
• Introduction to Crude Palm Oil

• Statistics

• Trading Volume

• Trade Participants in the Region

• Trade Associations




  Statistics & Contract Information




     Source: Bursa Malaysia Derivatives




                                          6
Statistics & Contract Information




  Source: Bursa Malaysia Derivatives




Statistics & Contract Information




  Source: Bursa Malaysia Derivatives




                                       7
Statistics & Contract Information




  Source: Bursa Malaysia Derivatives




Statistics & Contract Information




  Source: Bursa Malaysia Derivatives




                                       8
Statistics & Contract Information




   Source: Bursa Malaysia Derivatives




Statistics & Contract Information
 Malaysia’s Crude Palm Oil Demand & Supply (Jan 01 – Oct 08)




 Source: Bursa Malaysia Derivatives




                                                               9
           CPO Futures Contract Specifications
       Contract Code                                                               FCPO
Underlying Instrument            Crude Palm Oil

Contract Size                    25 metric tons

Minimum Price                    RM1 per metric ton
Fluctuation
Daily Price Limits               With the exception of trades in the spot month, trades for future delivery of Crude Palm Oil in any
                                 month shall not be made, during any one Business Day, at prices varying more than 10% above
                                 or below the settlement prices of the preceding Business Day (“the 10% Limit”) except as
                                 provided below.
                                 When at least 3 non-spot month contracts are trading at the 10% Limit, the Exchange shall
                                 announce a 10-minute cooling off period (“the Cooling Off Period”) for all contract months
                                 (except the spot month) during which trading shall only take place within the 10% Limit.
                                 Following the Cooling Off Period, all contract months shall be specified as interrupted for a
                                 period of 5 minutes, after which the prices traded for all contract months (except the spot month)
                                 shall not vary more than 15% above or below the settlement prices of the preceding Business
                                 Day (“the 15% Limit”).
                                 If the 10% Limit is triggered less than 30 minutes before the end of the first trading session, the
                                 following shall apply:-
                                         a.the contract months shall not be specified as interrupted;
                                         b.the 10% Limit shall be applied to all contract months (except the spot month) for the rest
                                         of the first trading session; and
                                         c.the 15% Limit shall be applied for all contract months (except the spot month) during the
                                         second trading session.
                                 If the 10% Limit is triggered less than 30 minutes before the end of the second trading session,
                                 the 10% Limit shall be applied to all contract months (except the spot month) for the rest of the
                                 Business Day.




           CPO Futures Contract Specifications
Contract Months                   Spot month and the next 5 succeeding months, and thereafter, alternate months up to 24 months
                                  ahead
Trading Hours                     First trading session:
                                  Malaysian time: 10:30 a.m. to 12:30 p.m.
                                  Second trading session:
                                  Malaysian time: 3:00 p.m. to 6:00 p.m.

Speculative Position Limits       500 contracts net long or net short for the spot month
                                  5,000 contracts for any single delivery month except for the spot month
                                  8,000 contracts for all contract months combined

Final Trading Day and Maturity    Contract expires at noon on the 15th day of the delivery month, or if the 15th is a non-market day, the
Date                              preceding Business Day.

Tender Period                     1st Business Day to the 20th Business Day of the delivery month, or if the 20th is a non-market day,
                                  the preceding Business Day.
Contract Grade and Delivery       Crude Palm Oil of good merchantable quality, in bulk, unbleached, in Port Tank Installations approved
Points                            by the Exchange located at the option of the seller at Port Kelang, Penang/Butterworth and Pasir
                                  Gudang (Johor).
                                  Free Fatty Acids (FFA) of palm oil delivered into Port Tank Installations shall not exceed 4% and from
                                  Port Tank Installations shall not exceed 5%.
                                  Moisture and impurities shall not exceed 0.25%.
                                  Deterioration of Bleachability Index (DOBI) value of palm oil delivered into Port Tank Installations shall
                                  be at a minimum of 2.5 and of palm oil delivered from Port Tank Installations shall be at a minimum of
                                  2.31.
Deliverable Unit                  25 metric tons, plus or minus not more than 2%.
                                  Settlement of weight differences shall be based on the simple average of the daily Settlement Prices of
                                  the delivery month from:
                                  a.the 1st Business Day of the delivery month to the day of tender, if the tender is made before the last
                                  trading day of the delivery month; or
                                  b.the 1st Business Day of the delivery month to the Business Day immediately preceding the last day
                                  of trading, if the tender is made on the last trading day or thereafter.




                                                                                                                                               10
• Introduction to Natural Rubber

• Statistics (2005/2006)

• Trading Volume

• Trade Participants in the Region

• Trade Associations




     Trade Participants in the Region
  Malaysia
  Refiners                                    Brokers
  1 Cargill Sdn Bhd                           1 Agri Commodities Pte Ltd
  2 Felda Sdn Bhd                             2 Ling Chihsien Sdn Bhd
  3 Golden Jomalina Food Industries Sdn       3 Marpro Oils & Grains Sdn Bhd
     Bhd                                      4 Matthes & Porton (M) Sdn Bhd
  4 Kempas Edible Oil Sdn Bhd                 5 Noble Resources Pte Ltd
  5 Keck Seng (M) Bhd                         6 Sinaran Palm Services Sdn Bhd
  6 KL-Kepong Edible Oils Sdn Bhd             7 Sprint Exim Pte Ltd
  7 Lam Soon Edible Oils Sdn Bhd              8 Transgrain (M) Sdn Bhd
  8 Intercontinental Specialty Fats Sdn Bhd   9 Tropical Oil Pte Ltd
  9 IOI Edible Oils Sdn Bhd
  10 Ngo Chew Hong Oils & Fats Sdn Bhd
  11 Malaysia Vegetable Oil Refinery Sdn
     Bhd
  12 Pacific Oils & Fats Industries Sdn Bhd
  13 Pan-Century Edible Oils Sdn Bhd
  14 PGEO Sdn Bhd
  15 Senawang Edible Oil Sdn Bhd
  16 Southern Edible Oil Sdn Bhd
  17 Unitata Bhd
  18 Wilmar Edible Oils Sdn Bhd




                                                                                11
  Trade Participants in the Region
Malaysia
International Trading Houses/Dealers
1 AarhusKarlshamn Sdn Bhd                    19   Felcra Bhd
2 Agmas Trading Pte Ltd                      20   Felda-Johore Bulkers Sdn Bhd
3 Cargill Int’l Trading Pte Ltd              21   Ladang Petri Tenggara Sdn Bhd
4 Golden Agri Int’l Trading Ltd              22   MM Vitaoils Sdn Bhd
5 Jawala Corporation Sdn Bhd                 23   Musim Mastika (M) Sdn Bhd
6 Josovina Commodities Sdn Bhd               24   Premium Vegetable Oils Sdn Bhd
7 Safic-Alcan (M) Sdn Bhd                    25   Unilever (M) Holdings Sdn Bhd
8 PT Bina Karya Prima                        26   Wawasan Tebrau Sdn Bhd
9 Louis Dreyfus Asia Pte Ltd
10 Mitsubishi Corporations
11 Mitsui & Co Ltd
12 Pacific Inter-Link Sdn Bhd
13 Pacific Rim Plantation Services Pte Ltd
14 Wilmar Trading Pte Ltd
15 Savola Mapoil Sdn Bhd
16 Alami Vegetable Oil Products Sdn Bhd
17 Asian Agri Abadi Oils & Fats Ltd
18 Derifats Chemicals Sdn Bhd




  Trade Participants in the Region
Indonesia
 Plantation companies/Processors/Exporters   19   PT Jaya Baru Pertama
 • PTP Nusantara                             20   PT Kinar Lapiga
 • PT Socfindo                               21   PT Satya Kisma Usaha
 • PT London Sumatera                        22   PT MP Leidong West Indonesia
 • PT Hasjrat Tjipta                         23   PT Tapian Nadenggan
 • PT PD Paya Pinang                         24   PT Supra Matra Abadi
 • PT Tolan Tiga Indonesia                   25   PT Megah Pusaka Andalas
 • PT Sidojadi                               26   PT Bakrie Sumatra Plant
 • PT Serdang Tengah                         27   PT Mopoli Raya
 • Proyek Small Holder Kodam                 28   Pusat Penelitian Kelapa Sawit
 • PT Smart Corp                             29   PT Indah Pontjan
 • PT Asam Jawa                              30   PT Mazuma Agro Indonesia
 • PT Binanga Mandala                        31   PT Permata Hijau Sawit
 • PT Moeis                                  32   PT Damai Nusa Sekawan
 • PT Gunung Melayu                          33   PT PD. Perkebunan Sumatera Utara
 • PT Cisadane Sawit Raya                    34   PT Amal Tani Perk. Tj. Putri
 • PT Torganda                               35   PT Austindo Nusantara Jaya Agri
 • PT Tasik Raja                             36   PT Bandar Meriah
 • PT Herfinta Farm & Plant                  37   PT First Mujur Plant & Industry
                                             38   PT Sumber Tani Agung




                                                                                     12
   Trade Participants in the Region
Indonesia
Plantation companies/Processors/Exporters
• PT Merbau Jaya Indahraya                  58    PT Perkenunan Minanga Ogan
• PT Umada                                  59    PT Pati Sari
• PT Karimun Aromatic Co Ltd                60    PT PP Kwala Simpang
• PT Tara Bintang Nusa                      61    PT Kalimantan Sanggar Pusaka
• PT Serbahuta Jaya                         62    PT Bina Sains Corp
• PT Perkebunan Inti Sawit Subur            63    PT Teumaron
• PT Daya Labuhan Indah                     64    PT Swakarsa Sinar Sentosa
• PT Siringo-ringo                          65    PT Cipta Futura
• PT Harisawit Jaya                         66    PT Bintang Harapan Desa
• PT Nubika Jaya                            67    PT Suryabumi Agrolanggeng
• PT Anugerah Langkat Makmur                68    PT Rea Kaltim Plantations
• PT Ratna Exlima                           69    PT Bahari Lestari
• PT Sago Nauli                             70    PT Perkebunan Lembah Bakti
• PT Karya Hevea Indonesia                  71    PT Waru Kaltim Plant
• PT Condong Garut                          72    PT Kalista Alam
• PT Tolan Tiga Indonesia                   73    PT Fazar Baizury & Brothers
• PT Parasawita                             74    PT Tunas Sawaerma
• PT Perkebunan Timbang Langsa              75    PT Palm Lampung Persada
• PT Mopoli Raya                            76    PT Agra Para Citra
                                            77    PT Agricinal




   Trade Participants in the Region
Indonesia
Plantation companies/Processors/Exporters
• PT Poliplant Sejahtera                    97    PT Indri Plant
• PT Surya Borneoindah                      98    PT Cibaliung Tunggal Plant
• PT Jaya Mandiri Sukses                    99    PT Inecda Palnt.
• PT Sinar Musi Prima                       100   PT Gunung Mas Raya
• PT Forestalestari Dwikarya                101   PT Srikat Putra
• PT Bumipermai Lestari                     102   PT Sari Lembah Subur
• PT Sumber Indah Perkasa                   103   PT Eka Dura Indonesia
• PT Hindoli                                104   PT CV. Citra Buana
• PT Binarupat Sepanglestari                105   PT Asiatic Persada
• PT Salim Ivomas Tunggal                   106   PT Tunjuk Langit Sejahtera
• PT Ivo Mas Tunggal                        107   PT Petaling Mandara Guna
• PT Inti Indosawit Subur                   108   PT Sumber Tama Nusa Pertiwi
• PT Tunggal Perkasa Plantations            109   PT Eramitra Agro Lestari
• PT Ganda Buanindo                         110   PT Sari Aditya Loka
• PT Tunggal Mitra Plantations              111   PT Jambi Agro Wijaya
• PT Adimulia Agrolestari Group             112   PT Trimitra Lestari
• PT Langgam Harmuni-Perk.                  113   PT Kresna Duta Agroindo
• PT Air Jernih-Perkebunan                  114   PT Jamika Raya
• PT Ciptadaya Sejatiluhur                  115   PT Kirana Sekernan
                                            116   PT Agrowiyana




                                                                                 13
     Trade Participants in the Region
Indonesia
Plantation companies/Processors/Exporters   136    PT Inti Gerak Maju
•   PT Bahari Gembira Ria                   137    PT Sinar Kencana Inti Perkasa
•   PT Agro Masang Plantation               138    PT Gawi Makmur Kalimantan
•   PT Pritama Mulya Jaya                   139    PT Damit Mitra Sekawan
•   PT Perkebunan Anak Nagari Pasaman       140    PT Bumi Raya Investindo
•   PT Gersindo Minang Plant                141    PT Alam Raya Kencanna Mas
•   PT Mutiara Agam                         142    PT Singaland Asetama
•   PT Bakrie Pasaman Plantations           143    PT Candi Artha
•   PT INcasi Raya                          144    PT Buana Karya Bhakti
•   PT Pasaman Marama Sejahtera             145    PT Kintap Jaya Wattindo
•   PT Bintara Tani Nusantara               146    PT Bersama Sejahtera Sakti
•   PT Sumber Andalas Kencana               147    PT Swadaya Andika
•   PT Tidar Sawit Sungkai                  148    PT Paripurna Swakarsa
•   PT Tidar Kerinci Agung                  149    PT Langgeng Muara Makmur
•   PT Anam Koto                            150    PT Laguna Mandiri\
•   PT Perkebunan Nusantara                 151    PT Ladang Rumpun Subur Abadi
•   PT Agrowiratama                         152    PT Sajang Heulang
•   PT Tri Sangga Guna                      153    Cakradenta Agung Pertiwi
•   PT Indoraya Everlatex                   154    PT Cakung Permata Nusa
•   PT Pola Kahuripan                       155    Nama Perusahaan




     Trade Participants in the Region
      Indonesia
       Plantation companies/Processors/Exporters
       •   PT Tamaco Graha Krida
       •   PT Letawa
       •   PT Hardaya Inti Plantations
       •   PT Mamuang
       •   PT Surya Lestari
       •   PT Pasang Kayu
       •   PT Unggul Widya Teknologi Lestari
       •   PT Agro Indo Mas
       •   PT Binasawit Abadi Pratama
       •   PT Wana Sawit Subur
       •   PT Gemareksa Mekarsari
       •   PT Bangun Jaya Alam
       •   PT Satya Kisma Usaha
       •   PT Bisma dharma Kencana
       •   PT Sungai Rangit
       •   PT Agro Menara Rahmat
       •   PT Gunung Sejahtera Dua Indah
       •   PT Gunung Sejahtera Yoli Makmur
       •   PT Gunung Sejahtera Putih Pesona




                                                                                   14
• Introduction to Natural Rubber

• Statistics (2005/2006)

• Trading Volume

• Trade Participants in the Region

• Trade Associations




                 Trade Associations
 Palm Oil Trade Associations
 Indonesia
 •   Palm Oil Association of Indonesia (GAPKI) http://www.gapki.org/

 Malaysia
 •   Palm Oil Refiners Association of Malaysia (PORAM)
     http://www.poram.org.my
 •   Palm Oil Millers Association of Malaysia (POMA)

 Thailand
 •    Palm Oil Crushing Mill Association of Thailand (POCA)

 International
 •    Federation of Oils, Seeds and Fats Associations (FOSFA)
      http://www.fosfa.org




                                                                       15
                        Disclaimer
The information contained in these course materials provided contain
information of a general nature only and are produced for investor education
purposes only. They do not constitute investment advice in any manner
whatsoever or have any regard to the specific investment objectives,
financial situation or individual needs of any particular person receiving
them. Examples are used for illustrative purposes only and do not constitute
investment advice.

Phillip Futures makes no guarantee, warranties and representations of any
kind whatsoever, express or implied, including but not limited to, the
accuracy, completeness, merchantability, or fitness for any particular
purpose, of such information or as to the results obtained by any person from
the use of any information or any financial instrument mentioned in the
course materials.




                                                                                16

				
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