A Study on Malaysian Crude Palm Oil Price Volatility | Chapter 7 | Modern Perspectives in Economics, Business and Management Vol. 6

 Palm oil is one of the commodities that contributes to the Malaysian economy. Despite the palm oil industry's impressive growth, the price of crude palm oil (CPO), or processed palm oil, has been extremely volatile during the last two decades. As a result, the purpose of this article is to investigate the relationship and effects of four macroeconomic drivers on Malaysian CPO prices, namely the exchange rate (EXC), inflation rate (INF), money supply (M3), and growth domestic product (GDP), over a 20-year period from 1999 to 2018. We hope to discover the determinants that have a substantial relationship with CPO prices as a result of the research. In addition, we aim to identify the determinants that have a substantial positive or negative impact on CPO pricing. This analysis makes use of secondary annual time series data from the World Bank and DataStream. The correlation test reveals that EXC has a negative correlation with CPO price, whereas INF, M3, and GDP all have a positive association. EXC and M3 are not significant drivers of CPO prices, according to multiple regression analyses, although INF and GDP are. These findings could help policymakers, palm oil industry actors, and CPO-based product producers forecast and make the best policy, commercial, and investment decisions possible.

Author (S) Details

Mohamad Azwan Md Isa
Department of Finance, Faculty of Business and Management, Universiti Teknologi MARA, Johor Branch, Segamat Campus, Malaysia.

Azlan Taha Baharim
Department of Finance, Faculty of Business and Management, Universiti Teknologi MARA, Johor Branch, Pasir Gudang Campus, Malaysia.

Suhana Mohamed
Department of Finance, Faculty of Business and Management, Universiti Teknologi MARA, Johor Branch, Pasir Gudang Campus, Malaysia.

Mohd Khairul Ariff Noh
Department of Finance, Faculty of Business and Management, Universiti Teknologi MARA, Johor Branch, Segamat Campus, Malaysia.

Ferri Nasrul
Department of Finance, Faculty of Business and Management, Universiti Teknologi MARA, Johor Branch, Segamat Campus, Malaysia.

Wan Muhd Faez Wan Ibrahim
Department of Finance, Faculty of Business and Management, Universiti Teknologi MARA, Sarawak Branch, Malaysia.

Siti Salwa Hassan
Department of Finance, Faculty of Business and Management, Universiti Teknologi MARA, Sarawak Branch, Malaysia.

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