The Dalian Commodity Exchange (DCE) has been granted approval by the China Securities Regulatory Commission (CSRC) to launch palm oil futures.


It is set to be the fifth commodity futures contract to be approved by CSRC on the exchange, following zinc, linear low density polyethene (LLDPE), zinc and gold futures being accepted earlier this year. LLDPE was launched on the DCE in July, while gold was launched on the Shanghai Futures Exchange.


Palm oil is used in a number of processed foodstuffs as well as being increasingly used as a feedstock for biofuel production. China has become a major importer of palm oil, and demand for the oil has provoked price increases across all edible oil products.


The introduction of palm oil futures should be a useful tool for both traders and bankers who want a means of hedging risks in deals.