https://opiej.mpob.gov.my Oil Palm Industry Economic Journal Tue, 28 Aug 2018 05:20:11 +0000 en-US hourly 1 https://wordpress.org/?v=7.0 https://opiej.mpob.gov.my/price-volatility-spill-over-in-the-malaysian-palm-oil-industry/ Tue, 28 Aug 2018 05:20:11 +0000 https://opiej.mpob.gov.my/?p=222 Read more]]> This study examines volatility spill over between the domestic prices of selected palm oil products and the major causative factors of the volatility. Empirically, it was found that palm oil has moderate price volatility and a short-term effect in unidirectional and bi-directional price volatility spill over to the domestic prices of selected palm oil products. Since crude palm oil (CPO) is a price leader among the other selected palm oil products, an effort should be made to stabilize its price to minimize volatility in all the other prices. Using the major causative factors of price volatility, a model was developed to forecast domestic prices for the selected palm oil products. The prices for CPO and RBD palm olein (POL) were forecast and found to be good with error of less than 2% with all the directions for prices correct. Stabilizing the palm oil price can be done through market power by a monopolistic producer or forming a producer cartel or through international commodity agreements between buyers and sellers. It is believed that creating an alliance between Indonesia and Malaysia should boost the bargaining power of both countries in setting the CPO price and control output, thereby reducing the volatility of all palm oil products in the future.

]]> https://opiej.mpob.gov.my/a-study-on-the-relationship-between-the-futures-and-physical-prices-of-palm-oil/ Tue, 28 Aug 2018 05:18:57 +0000 https://opiej.mpob.gov.my/?p=220 Read more]]> The difference between cash and futures prices is known as basis. It represents the local demand and supply situation as well as the risk factors associated with the physical commodity trade. Forecast basis can be used with the futures prices to predict the cash price of palm oil. In addition, using the expected trends in basis can improve hedging by both buyers and sellers. Forecasts for other crops using basis from simple historical averages compare favourably with the results from more complex forecasting models. This work investigated the behaviour of crude palm oil (CPO) basis and compared practical methods of forecasting CPO basis by regions in Malaysia using multi-year historical averages.

]]> https://opiej.mpob.gov.my/impact-assessment-of-liberalizing-trade-on-malaysian-crude-palm-oil/ Tue, 28 Aug 2018 05:16:53 +0000 https://opiej.mpob.gov.my/?p=218 Read more]]> This study analyses the impact of lifting the export tax on Malaysian crude palm oil. In the first section, the structural equation is developed incorporating Malaysian palm oil products, especially focusing on crude palm oil (CPO) and processed palm oil (PPO). The study deals with the conceptual model and dynamic specification of the Malaysian palm oil market model as regards the oil palm area, palm oil supply, domestic consumption, imports and exports of palm oil products, stocks and domestic price relationships. The model also included the Indonesian palm oil market model as well as world palm oil price relationships due to the significant impact of both factors on Malaysian palm oil in international trade.

]]> https://opiej.mpob.gov.my/technological-development-and-new-growth-areas-of-the-oil-palm-industry/ Tue, 28 Aug 2018 05:14:23 +0000 https://opiej.mpob.gov.my/?p=216 Read more]]> Technological development has transformed the Malaysian palm oil industry into a strategic and well planned industry that responds to global challenges. In particular, genetic knowledge since as early as 1912 first led the phenomenal growth of the industry through the planting of tenera instead of dura palms. This was complemented by the government allocating land to the poor and landless to plant more oil palm, in great part causing the area to increase from 54 000 ha in 1960 to 1.02 million hectares in 1980 and 2.03 million hectares in 1990. By 2006, there were 4.16 million hectares of oil palm, constituting nearly two-thirds of the national agricultural area (Table 1). Malaysia continues to be the world’s largest palm oil producer with a production of 15.90 million tonnes in 2006. The success of the crop is largely market driven with good longterm price prospects for palm oil making oil palm more attractive than most other crops. Palm oil contributes more than one-third of the national agricultural GDP, generating RM 31.81 billion in export earnings in 2006, making it one of the pillars of Malaysia’s economy. At present, the industry employs more than 1.5 million people in the core and related sectors. This paper provides an overview of the technological developments which have propelled the industry into a strategic and important sector and which will shape the future of the oil palm agro industry.

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