KUALA LUMPUR, March 9 (Bernama) -- The new US dollar-denominated palm oil futures contract is scheduled to be launched in Kuala Lumpur on May 24 and simultaneously in Chicago on May 23.

In announcing the new product, Commodities CME Group's managing director of agricultural products and services, Timothy J. Andriesen, said the US dollar-denominated palm oil futures contracts are expected to be traded on the CME Globex.

"It is an outstanding development. I think it will increase the portfolio of contract in the palm oil industry on a global basis," said Attunga Capital Pty Ltd's portfolio manager Phillip Pyle.

Speaking at the Palm and Lauric Oils Conference & Exhibition: Price Outlook (POIC) 2010/2011 here today, Pyle said the new product would also contribute to the growth of the volume market in Malaysia.

Last year, Chicago-based CME Group acquired a 25 per cent stake in Bursa Malaysia Bhd's derivatives business.

The partnership with CME Group involved licensing of the Bursa Malaysia Derivatives Bhd's crude palm oil futures settlement price and the provision of CME Globex services, which is the electronic trading platform.

It also allowed existing and future Bursa Malaysia Derivatives products to be transferred for listing on CME Globex, with the transfer of all products expected to take place by the second half of this year.

On the outlook of the palm oil industry, Pyle said the market was likely to remain strong in line with high soybean oil prices as well as production uncertainty.

"Palm oil prices have strengthened on a relative basis with soyoil," he said.

In his presentation titled "Palm & Edible Oil Price Outlook Through the Eyes of a Hedge Fund", Pyle said palm oil exports had increased strongly over the past year, benefiting from the reduced availability of South American soyoil.

"The strength of the export programme combined with some uncertainty about future production levels has resulted in strengthening palm oil prices," he said.

At the conference, IOI Corporation Bhd's group commodity marketing director Yong Chin Fatt said the trading of commodities, including palm oil, would be volatile but it could be subdued.

"In the past we were only dealing with fundamental factors but now we are dealing with external factors as well. And these increase the volatility due to hedge funds," he said.

For the past one year, crude palm oil prices movement has been on a gradual basis which is good for the market, according to Yong.

-- BERNAMA