06/09/2008 (Daily Times), Kuala Lumpur - Malaysia’s new dollar-based crude palm oil futures debuted in light trade on Friday amid a sell-off in vegetable oil markets pressured by weaker oil prices.

But the new contract, owned by the Derivatives Exchange of stock exchange operator Bursa Malaysia, may lure global investors keen to hedge currency risks and derive speculative mileage as the tropical oil is expected to rebound by end-2008.

Traders say the Malaysian contract may stand a better chance of winning against its dollar-based rival launched by Singapore’s Joint Asian Derivatives Exchange last year as investors can exploit arbitrage opportunities from Bursa’a international ringgit-based benchmark.

The third-month November contract stood at $696.50 per tonne in early trade with five lots of 25 tonnes each transacted. Crude palm oil for December delivery traded at $699, with another 5 lots changing hands.

The international benchmark, the ringgit-based crude palm oil futures stood 1.8 percent lower at 2,465 ringgit ($719.7) by midday on Friday after sliding as much as 3.6 percent earlier as faltering oil markets weighed on vegetable oil prices.

Other traders say it may take a while for the dollar-contract to reflect market realities with some saying they still preferred banks to hedge their currency risks.

The international benchmark, the ringgit-based crude palm oil futures slid 3.6 percent on Friday.

Malaysia’s benchmark palm oil futures have almost halved from record levels hit in March as palm oil stocks have risen and speculative hedge funds have fled energy and commodities, spooked by the global market downturn.

Malaysia’s plantation index has dived nearly 32 percent this year, led by sector bellwethers IOI, KL Kepong and Sime Darby But prominent industry analysts Dorab Mistry and Thomas Mielke noted that biodiesel demand will help prop up price of the vegetable oil.