Impact of crude oil prices on the Malaysian palm oil market

• المؤلفون الرئيسيون: Applanaidu, Shri Dewi, Abdel Hameed, Amna Awad
• التنسيق: Conference or Workshop Item
• اللغة: English
• منشور في: 2013
• الموضوعات: HB Economic Theory
• الوصول للمادة أونلاين: http://repo.uum.edu.my/17954/1/AIBC%202013%20680-690.pdf; http://repo.uum.edu.my/17954/

The prices of crude oil and vegetable oil appear to be moving in tandem, a trend which was not observed before.This study seeks to examine the impact of world crude prices on the Malaysian palm oil market.To that end, structural econometric model consisting of eight structural equations and four identities was proposed in this study.The model has been estimated by two-stage least squares method using annual data for the period 1976 – 2011.The counterfactual analysis of a sustained 10 per cent increase in crude oil prices predicted a direct effect of a 0.10 per cent increase in palm oil world price.The indirect effects through the palm oil world price transmission channels were: 5.62 per cent decrease in export of palm oil, 4.03 per cent decrease in palm oil import, 0.07 per cent decrease in Malaysian palm oil price, 0.01 per cent increase in domestic consumption and 0.05 per cent decrease in palm oil supply.The increase in petroleum price does bring positive economic impact on selected sub-sectors of the palm oil industry such as it encourages domestic demand and boost the bio diesel industry.