CHINA on Friday started the trading of palm oil options on the Dalian Commodity Exchange and allowed overseas investors to participate, marking another step in the country’s financial opening-up push.

The move made palm oil options the first yuan-denominated options contracts listed in China open to overseas investors, the Dalian exchange said.

The launch comes amid volatile palm oil prices, which have been declining since the start of the month after hitting milestone highs in May amid rising output and inventories, and declining exports.

Dalian’s palm olein futures have lost 11 percent so far this month, and fell 2.8 percent to a two-month low of 6,742 yuan (US$1,046.16) per ton Friday.

Benchmark palm oil prices on the Bursa Malaysia Derivatives Exchange have shed 16 percent so far in June and were last down 3 percent at 3,277 ringgit (US$791.16) per ton.

Options gives traders the right to buy or sell a futures position at a specified price, which can help them manage their price exposure.

“The options trading volume is about 3 percent of the total futures volume, which is good for the first trading day,” said James Wang, vice president of Singapore-based brokerage Straits Financial, which participated in the trading Friday.

“But the total market share of overseas participation in Dalian’s palm futures is not that great, most are still using Bursa,” said Wang, adding that many foreign traders are taking a “wait-and-see” approach.

“They are not as familiar with Chinese exchanges. Some are not even participating in the futures market yet.”

China is the world’s second-largest palm oil importer and a major consumer of palm oil in the world, with its import and consumption volumes accounting for 15 percent and 10 percent of the world’s total, respectively. (SD-Agencies)