Question 1

KUALA LUMPUR: Malaysian palm oil futures fell 0.42% on Wednesday, as concerns over rising new Covid-19 coronavirus infections weighed on investors' mood.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange dropped to 2,346 ringgit a tonne by 0256 GMT.

Palm oil futures ended higher on Tuesday, helped by expectations of importers stocking up on the commodity in case of further coronavirus-led lockdowns and a recovery in prices of rival oils.

Oil prices retreated on Wednesday, weighed down by an increase in U.S. crude inventories and worries about a potential second wave of the Covid-19 pandemic.

• Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
• Dalian's most active soya oil contract lost 0.14%, while its palm oil contract rose 1.13%. Soya oil prices on the Chicago Board of Trade shed 0.5%.
• Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
• Palm oil may end its bounce around a resistance at 2,388 ringgit per tonne, and then resume its drop, Reuters technical analyst Wang Tao said.

Asian share markets took a breather on Wednesday as a resurgence of coronavirus cases challenged market confidence in a rapid economic recovery, even as the rebound in U.S. retail sales in May broke all records. Reuters

https://www.thestar.com.my/business/business-news/2020/06/17/cpo-dips-on-worries-ofnew-covid-19-cases

The above news talks about the impact of the COVID-19 pandemic on futures contracts. Discuss any THREE (3) financial derivatives that are also being hit by the COVID-19 pandemic.

Hint: Do use your own suitable examples. (10 Marks)