Bursa mulls used cooking oil futures on biofuel demand
10/10/2024 (Bloomberg), Kuala Lumpur - Bursa Malaysia Bhd, the main exchange for the global palm oil market is considering launching a futures contract for used cooking oil as its demand as a biofuel feedstock grows.
The exchange has shared proposed specifications for the contract with industry participants in a document, according to people familiar with the matter.
The futures will be cash-settled and priced against the FOB Straits assessment for used cooking oil by S&P Global Commodity Insights, a copy of the proposed guidelines seen by Bloomberg showed.
The document stated that the bourse plans to offer the US dollar-denominated contract in lots of 25 metric tons.
A spokesperson for Bursa Malaysia said the specifications are intended for industry consultation and changes may still be made, with any contract launch subject to regulatory approval.
S&P Global declined to comment.
Used cooking oil — a byproduct from restaurants and food manufacturers — serves as a raw material to produce renewable fuels, which are increasingly in demand as governments seek to curb emissions.
Waste oil biofuels consumption rose by almost 40% between 2021 and 2023, according to a Transport & Environment lobby group estimate.
Still, suspicions of fake cooking oil from China alarmed the US biofuel industry earlier this year and spurred calls to hike levies on imports from the nation.
Bursa Malaysia is known for its physically delivered crude palm oil contract, as Southeast Asia produces the bulk of the world’s supply.
The exchange also lists futures for commodities including palm olein and tin.