ABSTRACT:
In the oils and fats sector, Malaysia can always be associated with palm oil due to its being the world’s biggest producer and exporter of the commodity. Malaysia produces and exports most of its palm oil due to its small population size and receives quite substantial amount of revenues from this product to support its economy. Thus, in this respect, it is important for the country to monitor the commodity’s production as well as its price that can be used in a way to determine the country’s revenue or in various decision-making processes. It is the objective of this paper then to analyse them econometrically and finally to forecast them. The paper indicates that production of palm oil will increase at a decreasing rate in future due to limited availability of land. By 2020, production is expected to reach 22 million tonnes while in the short term, it will be about 15.9 million tonnes in 2006. Price of palm oil is expected to fluctuate as before but in the near future, strengthening its level by increasing gradually in 2006.
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