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Determinants of Crude Palm Oil Price in Malaysia
Transcript of Determinants of Crude Palm Oil Price in Malaysia
CHAPTER 1: INTRODUCTION
CRUDE PALM OIL
- Give large impact on real output, balance of payment and government budget ( macroeconomic policy).
-Risk to producers, traders, consumers and government.
CHAPTER 2: LITERATURE REVIEW
Crude oil (machinery fuel, fertilizers, transport)
Food price increase 40% in 2007 and continued increasing sharply in 2008 cause by increase in crude oil price each year (Rosegrant, 2008).
CHAPTER 3: RESEARCH METHODOLOGY
CHAPTER 4: FINDINGS & RESULTS
MOHAMED IZZRYN MD SHAHRODIN
2012 652 654
- Vegetable oil, biomass, pizza dough, shampoo etc.
-Backbone of Malaysian economic. (39% of world production and 44% world export).
-Largest vegetable oil trade in world market.
To investigate the relationship between
selected determinants and Crude Palm
Oil price in Malaysia.
LIMITATIONS OF STUDY
Availability of supporting sources
Availability if data
Bank Negara Malaysia
January 2007 - July 2014
91 monthly observation
Crude Palm Oil
Is there any relationship between Crude Palm Oil price and at least one of the independent variables?
Unit Root Test / Stationary test
HO : Data is non stationary
H1 : Data is Stationary
H0 : No Correlation
H1 : Correlation
MULTIPLE LINEAR REGRESSION
Choose 1st model with AR
= 8.037306 +
(1st Model with AR)
(2nd Model with AR)
= 7.506476 +
F - TEST
H0 : No Independent variables affect dependent variable
H1 :At least one independent variable affect dependent variable
COEFFICIENT DETERMINATION (R2)
R2 : 1 ( regression explain data perfectly)
R2 : 0 ( regression is no better than guessing sample mean
DURBIN WATSON TEST
Closely to 2.0= Consistent with no correlation
Closely to 0= Probably serial correlation.
H0 : Residuals are normally distributed
H1 : Residuals are not normally distributed
AUTOCORRELATION/ SERIAL CORRELATION TEST
H0 : Error term is serially independent
H1 : Error term is not serially independent
H0 : Error term is homoscedastic.
H1 : Error term is heteroscedastic.
TEST ON FUNCTIONAL FORM
H0 : No Misspecification
H1 : Error in specification
Centered VIF should in range 1-10
CHAPTER 5 : CONCLUSION & RECOMMENDATIONS
significant toward CPO price in Malaysia
Fatimah Mohamed Arshad (Crude Oil, Palm Oil Stock and Price. How they link)
toward CPO price in Malaysia
Haslinda Aspar 2010
A study on relationship of price of soybean oil, price of crude oil, interest rate and exchange rate toward price of CPO in Malaysia
towards CPO price in Malaysia
toward CPO price in Malaysia
Ayat K. Ab Rahman (2013) Impact of Palm Oil Supply and Demand on Palm Oil Price Behaviour
Haslinda Aspar Study Study on Relationship of price of soybean oil, crude oil ,interest rate and exchange rate toward crude palm oil price in Malaysia
Selection of Independent Variables
Use bigger sample
Use different data structure
Using other method or model
Demand for CPO
Higher interest rate in saving will attracted most of investors to inject money in the bank, rather than invest in the risky market.
Easy monetary policy has contributed to increases in commodity prices, via either high demand or low supply
Less demand will push the price of crude palm oil down as it leads to surplus of supply of palm oil in palm oil producer countries
Malaysian Ringgit depreciate will also drag down price of CPO
Fluctuations in the commodity price are easier mitigated in floating than in fixed exchange rate regimes.