A crude palm oil futures contract is a contract based on the sale and purchase of crude palm oil at an agreed purchase price, in which the delivery and payment for the said commodity will take place not at the time when the contract is entered into, but at an agreed future period. In Malaysia, crude palm oil futures contracts are traded on Bursa Malaysia Derivatives Berhad (the Exchange) and settled through Bursa Malaysia Derivatives Clearing Berhad (the Clearing House). The crude palm oil futures contract is currently the most actively traded derivative on the Exchange compared to the other derivatives products offered and traded. It was reported that as at 31 December 2013, from a total of around 10.7 million derivatives contracts traded, 8 million were crude palm oil futures contracts (Bursa Malaysia Berhad, 2014). It was also stated that in 2013, the trading of crude palm oil futures contracts alone contributed almost a third of the total trading revenue of the local derivatives market, totaling Ringgit Malaysia 56 million (Bursa Malaysia Berhad, 2013).
