https://opiej.mpob.gov.my Oil Palm Industry Economic Journal Tue, 11 Mar 2025 05:23:19 +0000 en-US hourly 1 https://wordpress.org/?v=7.0 https://opiej.mpob.gov.my/palm-oil-price-review-and-outlook-2024/ Mon, 11 Nov 2024 04:18:00 +0000 https://opiej.mpob.gov.my/?p=2378 Read more]]> This article reviews the palm price movement in the first four months of this year and presents a price outlook for the rest of the year. This article identifies and explores the underlying price drivers of CPO futures and cash prices by exploring related palm fundamentals and relevant external variables. Crude palm oil (CPO) futures on Bursa Malaysia have been on a rising trajectory since the start of this year rallying from RM3661 (USD774)/t in January, accelerating to a peak of RM4407 (USD932)/t at the beginning of April, or up RM746 (USD158) or 20% in the three months. Prices took a turn after testing the high of RM4407 (USD932)/t, decelerating rapidly to RM3818 (USD808)/t towards the end of April or down by RM492 (USD104) or 11% in the space of four weeks. Overall year-to-date ending 30 April active month CPO futures averaged RM3989 (USD844)/t or just RM76 (USD16) or 2% higher than the same period last year reflecting a steady to marginal increase in prices compared to last year. This article will address the main factors in understanding the dynamics of CPO futures pricing behaviour by discussing the main fundamental price drivers for the rest of the remaining part of this year.

]]> https://opiej.mpob.gov.my/the-impact-of-asymmetric-relationship-between-crude-oil-and-palm-oil-prices-on-the-palm-oil-industry/ Wed, 27 Mar 2024 06:49:31 +0000 https://opiej.mpob.gov.my/?p=2275 Read more]]> The implementation of the palm biodiesel blend mandate in Malaysia has created new demand for palm oil, thus making the prices of both crude oil and palm oil move in tandem. Generally, the increase in demand for biodiesel products has resulted in a reduced supply of palm oil, which in turn has increased the price of crude palm oil (CPO) in the world market. However, the unpredictability of price movement which is highly influenced by the market situation and sentiment sometimes makes the relationship between both prices loosen. The motivation of this study is to analyse the relationship between Brent crude oil (BCO) and CPO using a non-linear autoregressive model (NARDL) for the period 2010-2019. By applying the Brock Dechert and Scheinkman (BDS), this study indicated the presence of the non-linearity relationship between BCO and CPO price. The bound tests with NARDL specification confirmed the asymmetric association between CPO price movements and their relation to positive and negative changes in BCO price. The estimated NARDL model confirmed the existence of an asymmetric relationship in the changes in CPO prices. This study found that in the long run, there is a significant relationship between the increase in BCO prices and CPO prices while no significant relationship between the decrease in BCO prices to CPO prices in the long run. In the short run, only the changes in BCO prices positively affect palm oil price inflation. The findings of this study are imperative to the industry players especially to the biofuel producers and exporters since changes in CPO price will directly affect their profitability and cost of production.

]]> https://opiej.mpob.gov.my/changing-market-trends-in-the-oils-and-fats-sector/ Tue, 28 Aug 2018 05:27:44 +0000 https://opiej.mpob.gov.my/?p=232 Read more]]> The contribution of the oil palm industry to Malaysia’s economic development has indeed been impressive. Changing market trends and rapid developments in competing oils has, nevertheless, continued to pose challenges to palm oil in terms of market opportunities. This article provides an overview of the developments that the oils and fats industry has undergone in terms of world balance, with special reference to palm oil price and market performance.

]]> https://opiej.mpob.gov.my/impact-of-palm-oil-based-biodiesel-demand-on-palm-oil-price/ Tue, 28 Aug 2018 05:24:46 +0000 https://opiej.mpob.gov.my/?p=228 Read more]]> Biodiesel has become an important renewable fuel, especially with the high price of petroleum and growing concern for the environment. This article analyses the impact of the rise in biodiesel demand on the price of Malaysian palm oil. The demand for biodiesel would reduce the volume of palm oil available in the market, putting upward pressure on its price and those of other vegetable oils. With this recent new demand, the palm oil price has increased sharply since July 2006, which can be taken as the date when the palm oil price began to be influenced by the traditional economic factors, such as its production, price of soyabean oil, stock-usage ratio and weather, as well as by the new demand for biodiesel. The autoregressive integrated moving average (ARIMA) method was used to estimate the palm oil price from July 2006 to end 2007 without the effect of biodiesel. This showed a rising trend – as with biodiesel included – but much less steep than with the effect of biodiesel included. This result was confirmed by the time-varying parameters model used to compensate for the ARIMA results. Using the model and considering all the factors, including biodiesel demand, the palm oil price is forecast to remain high, averaging RM 3500/t for 2008.

]]> https://opiej.mpob.gov.my/simulation-study-on-the-availability-of-palm-oil-stock/ Tue, 28 Aug 2018 05:23:32 +0000 https://opiej.mpob.gov.my/?p=226 Read more]]> The volume of palm oil stock has a strong influence on its price. The palm oil stock has long hovered around one million tonnes, and has become the physiological level below and above which prices tend to be bullish and bearish, respectively. The stock level mainly depends on the production and export of palm oil, which imports and local consumption play minor roles. An unanticipated high production of crude palm oil, generally leads to an unintended build-up of palm oil stock, especially when the export is slow. The rapid development in the production of palm oil and diverse usage of it, justify the revision of the physiological stock level that implies also the supply reliability of Malaysian palm oil.

]]> https://opiej.mpob.gov.my/recent-development-in-the-world-palm-oil-prices-an-overview/ Tue, 28 Aug 2018 05:21:32 +0000 https://opiej.mpob.gov.my/?p=224 Read more]]> In the past, there have been spikes in the palm oil price, mainly due to the demand and supply imbalance of oils and fats, in particular, that for soyabean oil. However, since mid 2006, the month-to-month spikes have become more pronounced and sustained, and been attributed not only to the overall supply and demand imbalance of edible oils and fats but also to the increasing demand for the oils as fuel. This development has shifted the demand curve for palm oil to the right. In this article, the impacts of the trend will be accessed on the consumption, trade, price competitiveness, investment in oil palm/palm oil and the use of palm oil for producing biodiesel.

]]> 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.

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