Determinants of the Price of Palm Oil In Malaysia

Summary of Research

Palm oil besides known as Elaeis guineensis. Palm oil is derived from the mush, and it can be found from African thenar. There are so many utilizations of palm oil, such as comestible oil, soaps, tapers, decorative and cocoas. The coloring material of palm oil normally ruddy colored, it is because of content of palm oil. The ruddy coloured content with two types of provitamin A, there are ?°-carotene and I?-carotene. a-carotene contents with 30mg per 100 g, and I?-carotene contents with 30mg together with Vitamin E. Usually I?-carotene already removed and go a pale oil. Three content of pale oil, saturated vegetable fats, mono-saturated and the last 1 is polyunsaturated. Besides that, other than ruddy colored of palm oil, there are yellow-white colourss and besides known as thenar meat oil. It can be use to do a oleo and cosmetics.

1.1.2 Palm Oil History

Palm oil has been found in West African states. This palm oil is good to do cooking oil. The utilizations of palm oil that been introduced by West African and has attracted the European merchandisers to do an international trade between this two state in order to purchased palm oil. Ashanti Empire or Ashanti Confederacy workss a big sum of oil thenar trees, while the King of Kingdom of Dahomey forbid whoever individual from cutting the palm oil trees.

This uses of thenar oil have been attracted the Britain ‘s Industrial. And the value of palm oil increased because of the demand from British Traders. Besides that, thenar oil besides can do soap, for illustration, Sunlight Soap and the Palmolive trade name. A state such as Ghana and Nigeria becomes a primary export from West African but in twelvemonth 1880 this export of palm oil was overtaken by chocolate.

1.1.3 Research of palm oil in Malaysia.

Research and development ( R & A ; D ) began to spread out the oil thenar genteelness in 1960s. This activities implemented after the set uping the Malaysia ‘s Department of Agriculture. The authorities besides provided a college to develop society how to works thenar oil. For illustration, the authorities established Kolej Serdang and now go Universiti Pertanian Malaysia ( UPM ) . This university encouraged the alumnuss ‘ pupil to carry on research related to the palm oil. Malaysia. In twelvemonth 1979, authorities established Palm Oil Research Institute of Malaysia ( PORIM ) . This institute support from UPM and B.C Sekhar as a laminitis and president besides back up Porim to be a co-ordinated establishment. Porim besides giving the chances to society particularly the scientist to make R & A ; D related to the utilizations of palm oil. In twelvemonth 2000, Porim changed to Malayan Palm Oil Board ( MPOB ) . Nowadays MPOB become good known at the international state.

1.1.4 Bright hereafter of palm oil in Malaya

Few old ages ago, the income from palm oil production has become the large part to Malaysia ‘s Economy. Because of the income addition from palm oil, many palm oil companies can give the employee fillips every twelvemonth. Besides that, oil thenar stockholders besides get the benefit of selling the thenar oil. Industry of palm oil said that, the monetary value of palm oil will keep every twelvemonth depends on the economic status.

Because of production of palm oil has contributed to Malaysia ‘s economic system, the alterations of palm oil monetary values in Malaysia ever published in newspapers. It is good for rural country, because rural countries are the biggest hectares in palm oil plantation.

As we know, monetary value of palm oil influenced by the production of palm oil, import and export, and so planetary economic status. If the planetary economic become more lag, it will the major fact that the importer will less confident to the production of the palm oil in our state.

If the monetary values of palm oil lessening, we can replant back the thenar and cut downing supply. This can assist the monetary values of palm oil addition back. Besides that, today, many new developments in engineerings besides can increases the production of palm oil.

1.2 Problem Statement

Monetary value of palm oil ever fluctuated depends 4 factors. The 4 factors are production of palm oil, export of palm oil, ingestion of palm oil, and land country in plantation of palm oil. The job of this research is hard to seek the informations in cyberspace. To happen this information, we must happen it at statistic section besides of UMS.

1.3 Research aim

This research has an aim that to happen a factor that influence the monetary value of palm oil in Malayan thenar oil market. After find the factor, we must happen the relationship between this four factors to the monetary values of palm oil. to happen this relationship, we must prove it one by one utilizing econometric.

1.4 Significance of the research

Research worker

This research suitable for the research workers who wants to derive cognition and information about thenar oil in Malaysia. All this information gather from cyberspace, diary, and by consequence from E-Views. So all society particularly researcher will derive cognition on the survey about determiner of the monetary value of palm oil in Malaysia.

Palm Oil Industry

The palm oil companies besides can acquire profit from this research by cognizing the factor that will act upon the monetary value of palm oil severally. If palm oil companies already knew what the factor can act upon the monetary value of palm oil, the palm oil companies increased the export of palm oil and our state besides can acquire higher income because of the production of palm oil.

Labor Study

Labor can cognize what are the large factor that can act upon the monetary value of palm oil, and so can their can increase public presentation in footings of work quality and many more.

1.5 Scope and Limitation of the survey

The range of this survey is around Malaysia and the informations collected on production of palm oil, export of palm oil, ingestion of palm oil, and plantation of palm oil in land country ( hectares ) . This information from twelvemonth 1980 to 2009, involved 29 old ages. The information for 2010 besides difficult to happen because twelvemonth 2010 is non finished yet. So the information for 2010 is non stated yet.

Chapter TWO

LITERATURE REVIEW

The old survey has been made to understand the impact of palm oil based-biodiesel demand on palm oil monetary values ( Ramli ; Roslan and Ayatollah, K 2007 ) . Nowadays biodiesel has become an of import fuel to our society. It is because of the turning concern for the environment. Demand for the biodiesel has become higher, and that consequence to the sum of palm oil that we can acquire in the market that seting its monetary values increased aggressively since July 2006. That yearss, the monetary values of palm oil influenced by the stock, supply, production. From July 2006 onwards, biofuel go a serious fuel of his renewable production. Biodiesel chiefly from thenar has increased the demand and altered the economic sciences of palm oil. This survey utilizing the autoregressive incorporate traveling norm ( ARIMA ) . This method has been proven to calculate from July 2006 to stop 2007 to calculate the monetary values of palm oil.

Supporting to this diary, the monetary values of crude oil and vegetable oil down to be traveling easy together. ( Anna Awad, Fatimah, 2009 ) . This old surveies have been made to happen the long term relationship the monetary values of rough oil and vegetable oil. They were utilizing the Engle-Granger two-stage to make the method. This survey usage informations over the period from January 1983 to March 2008. The two merchandises show the consequence of the strong grounds of a long relationship. Began in the 1970s until 21 century, the monetary value for all trade goods increased between January 2000 and March 2008. The increased of the monetary values caused by the increased crude oil monetary value more than 300 % , while nutrient monetary values increased 107 % during the same period and veggies oil increased of 192 % .

Besides that, ( Mohd Nasir, 2003 ) said that Malaysia is the largest manufacturer and Indonesia is the 2nd largest manufacturer. This two state is the exporter where they contribute 89.6 % of palm oil trade in the universe and 83.5 % of production. They besides export rough palm oil ( CPO ) and other than that processed thenar oil ( PPO ) . The Malaysia exporting measures of CPO increased from 0.4 million tones to 1.3 million tones in 2000 and 2001, followed by exports of Indonesian CPO increased from 1.8 to 2.0 million tones. Both states besides contributed PPO which is the larger portion of thenar merchandises. CPO and PPO in Malaysian were lower than Indonesia in 2001 and 2002. Both states merchandises imposed by the duties with the aims ab initio raising gross. For illustration, in Malaysia is to promoting down watercourse while for Indonesia it reflected to consumer down. Both states have been imposed revenue enhancements on export, and there is a difference manner the exports responsibility collectible.

( Ahmad Borhan and Mohd Arif, 2009 ) said that the monetary values of palm oil and it comprises rough palm oil and processed palm oil is a strong index of the degree of palm oil stock. The stock of thenar oil has been hovered around 1 million tones. With this sum, the volume has become the psychological which monetary values tend to be increased and decreased. The terminal of stock to the full depends on the export of palm oil and its production. While local use and import play smaller functions. The Malayan thenar oil industry has estimated that 1.8 million tones could go the new degree of palm oil stock. But it all depends on alteration in the demand and supply factors.

( James, 2008 ) said that the monetary values of rough palm oil ( CPO ) has a strong relationship with stock harmonizing to the conventional economic sciences. The economic sciences of oils and fats had changed in the last two old ages, that cause both monetary values and lifting in tandem harmonizing to traditional economic theory. Because of created the new function played by biodiesel, the strong marks of a linkages besides created. The palm oil monetary values should take into one history of two factors, the crude oil monetary value and the sum of oil stocks. The monetary value set can find by monetary values of crude oil. While the stocks can demo high or low thenar oil monetary values.

Malaysia ‘s economic development has so been impressive by the part of the palm oil industry. ( Sabri, Salmiah, Faizah and Nik Abdullah, 2008 ) . It besides altering the market tendencies and rapid development and has continued to present challenge. The development of oil and fats industry are provides and has undergone in footings of universe balance.

In the old diary, ( Mohd Basri, Mohd Arif, and Jamil, 2008 ) long clip ago, the monetary values of palm oil have been increased, particularly to the supply and demand of fats and oil. But since mid 2006, spikes have become more sustained. Besides that, spikes besides been attributed to the supply and demand of comestible oils and fats and besides to the increasing demand for the fuel. Because of the increased of thenar oil, the demand curve shifted to the right. The monetary values of oils have been increased somewhat.

( Ayat K Faizah, Ramli Abdullah and Nurul Hufaidah, 2007 ) survey on how to analyze volatility spill over. The survey focal point on between the domestic monetary values of palm oil and what major factor to the monetary values volatility. From the research, palm oil has moderate monetary value volatility. And attempt should be made to prolong the monetary value of rough palm oil ( CPO ) to minimise volatility in other monetary values caused of the monetary values of ( CPO ) become a monetary value leader among the other palm oil merchandises. There was a theoretical account to develop to calculate monetary values of palm oil merchandises in domestic.

( Ramli and Mohd Alias, 2006 ) . Malaysia besides known the universe ‘s biggest exporter of the palm oil and associated with palm oil. Because of the largest exporter the universe, it become of import for the state to take the trade good ‘s production and its monetary value and can be used to find the state gross or in procedure of determination devising. The aim of this paper is to analyze them econometrically and to calculate. The paper prognosis that in the hereafter, the production of palm oil can increased. By 2020, the production of palm oil can make 22 million tones. Monetary values of thenar oil besides can fluctuate but in the hereafter, its sum of monetary values increasing bit by bit.

( Basri ; Mohd Fauzi ; Mohd Noor Mamat and Rosli, 2007 ) analyses the impact of raising the export revenue enhancement on Malayan petroleum palm oil. First, the equation is developed, particularly on processed thenar oil ( PPO ) and rough thenar oil ( CPO ) . The survey comes out with the conceptual theoretical account of the Malayan thenar oil market theoretical account, such as the thenar oil supply, oil thenar country, imports and exports of palm oil merchandises, domestic ingestion, domestic monetary value relationship and stocks

Harmonizing to ( Ahmad Borhan, Faizah, Mohd Arif, Norhanani, 2006 ) , said that oilmeals, such as Soyabean repast ( SBM ) particularly an carnal provender competes with Malayan thenar meats expeller ( PKE ) . The competition exists among this two company because of the competitory monetary value. The increasing production besides will impact the status of Malayan PKE. Future development of the Malayan PKE depends to universe farm animal market.

( Ahmad Borhan, Mohd Noor, Mohd Arif, Norhanani, 2007 ) said that, the trade good trade will effected by the local demand and besides go the hazard to the physical trade good. The prediction method demand to use to calculate the monetary value of palm oil in the hereafter. Hedging can be improved by utilizing the expected tendencies. The behaviour of rough palm oil ( CPO ) can be determined by making this work. This work besides compared the prediction CPO in Malaysia. It was introduced in 1980 and go the monetary value find for fudging in pegged the monetary values. Good based can be determine by processing of monetary value find particularly on its demand and supply. Through arbitrage, the future monetary value of palm oil is realized in footings of aggregative degree. ( Fatimah, etal, 1994 ) utilizing Box Jenkins technique, calculating method, can foretell the thenar oil hereafters monetary values whether to execute better or non.

Harmonizing to ( Faizah, Ayat K, Mohd Nasir, 2006 ) fluctuate export markets and monetary values due to the current economic. Because of this, authorities giving full attending the monetary value of export demand. The good demanded will be present by the monetary value snap of demanded. Besides that, the demand for exports can foretell by looking for export demand snap. Malayan becomes largest portion in the export and this export snap is of import to estimations in order to keep the production of palm oil. Merely the alterations of the monetary values of palm oil will hold a large consequence to the export of palm oil. Recently, the comestible oils and fats has become replaceability merchandises. Malayan thenar oil can be influence by the figure of factor, and it ‘s the most of import to construction the international market. Palm oil monetary values will vie with other, for illustration comestible oils and do the thenar oil monetary values important.

It was said by ( A B, Ma, Chow, H Hamdan, Choo, 2006 ) every state depends on the energy and this energy becomes a cardinal factor to state to develop in the hereafter. Oil thenar industry has been build mill to bring forth steam and from electricity. In our state, there were 395 mills that treating 84 million tones fruit in twelvemonth 2005.

( Yusof, Mohd Arif, 2005 ) found that, handle oil such as an export oriented trade good is non easy to foretell in the hereafter. It involves look intoing the past public presentation of the palm oil. They make an overview about the palm oil industry, about the background, late and in the hereafter development. Long clip ago, production of palm oil is lowest among the soyabean oil and animate being oils. But, late the production of palm oil is the figure two in our state and the production exceed 29 million tones follow by soyabean oil and animate being oils. It is expected that palm oil production can make 37.15 million metric tons in 2020. This production of palm oil will lend to universe oils. Malaysia become the largest manufacturer in the universe and seek to keep the place in bring forthing 42 % metric tons to the universe demand of palm oil.

Conceptual Model

Independent variable Dependent volt-ampere.

Factor/supporting

Monetary value of palm oil Relationship

Production ( supply )

Export

Consumption

Land country ( Hectares )

Independent variable

There are 4 factors that influence the monetary value of palm oil. There are production ( supply ) , export, ingestion and land country in hectares. This independent variable besides can back up the monetary value of palm oil. Production can act upon the monetary values of palm oil by the supply in the market, the more supply in the market, the more it can act upon the monetary values of palm oil. It means that, if the supply exceeds the demand of the market, many unit of production are waste because of the demand non equal to the unit of production in the market. So to increase the demand in the market, house can cut down monetary values of the production in order to pull the demand of the market. Low monetary values of the production can increased the demand of the production in the market.

Export besides can act upon the monetary values of palm oil in the market by holding a export more than import in the market can do a state shortage in footings of net income. Same like production, but export trade in other state and do an international concern in order to derive net income. If have much demand in palm oil from other state, it means that, we should export more to accomplish the demand from other state. From this state of affairs, our state can take advantages to increase the monetary values of palm oil severally.

Consumption besides can act upon the monetary values of palm oil. It depends on how the consumer to the full utilized the usage of palm oil. If the consumer already knew the usage of the thenar oil, easy to them to cognize how of import the palm oil in our society. Because of that, the consumer will inquire for the palm oil and straight increased the demand for palm oil.

Other than that, land country of plantation besides can act upon the monetary values of palm oil. If we works more trees of palm oil in land, we are bring forthing more palm oil in the market. If the supply of the palm oil in the market exceed than demand, than many excess to that merchandise. So to get the better of this job, house must cut down the monetary values of palm oil to pull consumer to purchase the palm oil. But it is good to the house if the demand more than supply, so the house can increased the monetary value of palm oil in order to derive net income.

Dependent variable

The monetary value of palm oil is depending to this four factor, this four factor can act upon the monetary values of palm oil whether wants to increased or decreased.

Chapter THREE

DATA AND METHODOLOGY

LEAST SQUARE METHOD ( SINGLE REGRESSION ) and

( MULTIPLE REGRESSION )

The model developed in this survey is drawn both from econometric method ( which is based on the economic theory ) and the system kineticss attack. This subdivision discusses the econometric theoretical account utilizing least square method. It ‘s to correlate and analyze the relationships among dependent variable and independent variable. It is a economic theory signifier with statistical methods.

Factor determiners of monetary values of palm oil in Ringgit Malaysia ( RM ) . consists of 4 factor that influence the monetary value of palm oil, there are production ( supply ) , export in tones, ingestion of palm oil and land country of plantation of palm oil in hectares.

The first measure is happening clip series informations from 1980 to 2009, which influence the monetary value of palm oil to do a research and so depict it harmonizing to the econometric theoretical account. To regress the econometric theoretical account we must utilize the informations which influence the monetary values of palm oil. So this 4 factor is the of import informations to do a research. After reasoning backward, we can place relationship between dependant and independent variables.

These 4 factor besides known as independent variable and monetary value of thenar oil besides known as dependant variable which monetary value of palm oil depend on this 4 independent variable whether to increase or diminish. The monetary values of thenar ever fluctuate depend on this 4 independent variable. To prove this independent variable had a relationship between monetary values or non, the econometric theoretical account by utilizing least square method usage to prove one by one of this independent variable whether this independent variable has a relationship between dependant variable. But before reasoning backward, we must prove the variable utilizing unit root trial to do certain the chance below 0.05. This is because, we must do all variable important before reasoning backward the information and cognize what difference we should utilize before reasoning backward informations. After that, we log the information to do all informations less job in autocorrelation and less job in multicollinearity. After trial this econometric theoretical account, we look to the T-statistics, R-squared, Durbin-Watson stat. if t-stat are less than 2, this means that there is no relationship between independent variable and dependent variable and besides known every bit is non important. If more than 2, there is a relationship between independent variable and dependent variable. After trial one by one, we should regress all dependant variable utilizing multiple reasoning backward because of explanatory variable is more than one to look into whether all independent variable important or non.

3.1.1 Collecting of Data

Primary Data

Using the old diary and sum up that diary to give the information about this research.

Chapter 4

4.1 RESULT AND FINDINGS

Unit root trial

Unit root trial of monetary value of palm oil utilizing first difference to do the informations stationary.

Null Hypothesis: D ( PRICE ) has a unit root

Exogenous: Changeless

Lag Length: 4 ( Automatic – based on AIC, maxlag=7 )

t-Statistic

Augmented Dickey-Fuller trial statistic

-2.998437

Test critical values:

1 % degree

-3.737853

5 % degree

-2.991878

10 % degree

-2.635542

Graph of Price

Explanation. As we can see graph above, the monetary value of palm oil is fluctuated, but late, the monetary values of palm oil increased and so drop back.

Unit root trial of production utilizing first difference to do the informations stationary

Null Hypothesis: D ( PDC ) has a unit root

Exogenous: Changeless

Lag Length: 0 ( Automatic – based on AIC, maxlag=5 )

t-Statistic

Augmented Dickey-Fuller trial statistic

-3.998301

Test critical values:

1 % degree

-3.689194

5 % degree

-2.971853

10 % degree

-2.625121

Graph of Production

Explanation. The production of palm oil in our state decreased every twelvemonth because of other competition from Indonesia. Our state vie with Indonesia in footings of production because last clip Indonesia is a 2nd largest manufacturer in the universe and late, Indonesia already becomes the universe largest manufacturer in the universe follow by Malaysia. So our state production of palm oil decreased because of universe demand has two picks to import the palm oil.

Unit root trial of land utilizing first difference to do the informations stationary

Null Hypothesis: D ( LAND ) has a unit root

Exogenous: Changeless

Lag Length: 0 ( Automatic – based on AIC, maxlag=7 )

t-Statistic

Augmented Dickey-Fuller trial statistic

-4.664706

Test critical values:

1 % degree

-3.689194

5 % degree

-2.971853

10 % degree

-2.625121

Graph of Land

Explanation. The hectares of land in our state besides increased twelvemonth by twelvemonth because of people already know that works thenar oil can do majority of net income to them. Besides that, the plantation owners increased the hectares of plantation because authorities enhances them to works the thenar oil by giving them consciousness and so on.

Unit root trial of export utilizing first difference to do the informations stationary

Null Hypothesis: D ( EXP01 ) has a unit root

Exogenous: Changeless

Lag Length: 0 ( Automatic – based on AIC, maxlag=3 )

t-Statistic

Augmented Dickey-Fuller trial statistic

-3.609207

Test critical values:

1 % degree

-3.689194

5 % degree

-2.971853

10 % degree

-2.625121

Graph of Export

Explanation. Our export in our state besides decreased twelvemonth by twelvemonth, it is related to our production in our state. This is because of Indonesia besides export the palm oil in the universe. So the universe demand has two picks whether wants to import from Indonesia or our state.

Unit root trial of ingestion utilizing first difference to do the informations stationary

Null Hypothesis: D ( CNSPTN ) has a unit root

Exogenous: Changeless

Lag Length: 0 ( Automatic – based on AIC, maxlag=7 )

t-Statistic

Augmented Dickey-Fuller trial statistic

-4.569870

Test critical values:

1 % degree

-3.689194

5 % degree

-2.971853

10 % degree

-2.625121

Graph of Consumption

Explanation. Our ingestion in our state besides decreased in our state.

Single arrested development

Least square method-POPt=+bX

Between dependant variable and independent variable

Variable

C

Std-error

T-stat

R-Squared

DW-stat

Prob

D1LNPROD

0.329321

0.177300

1.85

0.113301

1.751273

0.0742

D1LNEXP

0.855506

0.254039

3.36

0.295760

1.816493

0.0023

D1LNCONS

0.171866

0.270477

0.63

0.021939

1.704933

0.5332

D1LNLAREA

0.097365

0.389766

0.24

0.678609

0.571303

0.8046

Table ONE

Analysis of informations:

Used e-view to regress and estimation utilizing Ordinary least square based on dependent variable and independent variables from the informations collected. Before reasoning backward the information, must make the unit root trial to do certain the information stationary or non, after that log the information to cut down the job of autocorrelation and multicollinearity. Then use first difference method because it is already reference in unit root trial to look into utilizing first difference method.

List of Equation

PPOt=price of palm oil in the market

PROD=production of palm oil ( supply )

EXP=export of palm oil to the universe demand ( tones )

CONS=consumption of palm oil in this market

L.AREA=landarea of palm oil plantation in Malaysia ( hectares )

Consequence of arrested development between POPt and PROD

Dependent variable: POPt and Independent variable: Goad

POPt=0.054234+0.329321t

The coefficient above shows that the relationship between monetary value and production of palm oil is positive relationship. It means that, 1 unit increased of production of thenar will take to increase monetary value of palm oil by 0.329321.

t-statistic=1.85

Reject Ho, because there is no important relationship between monetary value and production because t-statistic shows that it is important and below 2. So production can non act upon the monetary value of palm oil severally.

R-Squared =0.113301

Explanation. There are 11.33 % of the alterations in the dependent variables. Merely independent variable can explicate the dependant variable. 88.67 % can non be explained by the arrested development analysis due to some skip of independent variables. In other words, this R-squared show the weak relationship between dependant variable ( monetary value ) and independent variable ( production ) . It ‘s average that, when independent variable alteration 1 % , dependent variable will alter by 11.33 % . So, we can concluded that independent variable and dependent variable has a weak relationship because of the R-Squared is low.

Std-error=0.177300

Explanation. The smaller the value of SEE, the closer the informations points/actual points to the arrested development line.

DW-statistics=1.751273

Explanation. There is a less job in auto-correlation because DW shows value about than value 2. If the value of DW shows above 2, means that there is no job in autocorrelation

Probability=0.0742

Explanation. The variable is important at 0.05 ( 5 % ) important degree or 95 % assurance degree. If the chance is less than 0.05, it means that 95 % assurance interval accepted and there is a relationship between dependant variable and independent variable. The independent variable for the production is 0.0742. This production of palm oil ( supply ) can non act upon the monetary value of palm oil. It ‘s because if the production is excessively many in the market, the monetary value of palm oil will non consequence because society merely concern for the basic demands such as shelter, nutrient and society non concern for the production of palm oil. Lapp like if the production of palm oil is low, it will non act upon the monetary value of palm oil because society non truly wants the utilizations of palm oil.

Consequence of arrested development between POPt and EXP

Dependent variable: POPt and Independent variable: EXP

POPt=0.063604+0.855506t

The coefficient above show the positive relationship between monetary value and export. It means that, 1 unit increased export of palm oil will take to increase monetary value of palm oil by 0.855506

t-statistic=3.36

Besides accept Ho, because there besides a relationship between monetary value and export because t-statistic shows that it is important and above 2. So export besides can act upon the monetary value of palm oil severally.

R-Squared=0.295790

Explanation. There are 29.57 % of the alterations in the dependent variables. Merely the independent variable can explicate the dependant variable. 70.43 % can non be explained by the arrested development analysis due to some skip of independent variables. R-squared show the weak relationship between dependant variable ( monetary value ) and independent variable ( export ) . It can be explained when independent variable alteration 1 % , dependant variable besides will alter by 29.57 % . we can concluded that independent variable and dependent variable has a weak relationship because of the value of R-squared is low.

Std-error=0.254039

Explanation. The smaller the value of SEE, the closer the informations points/actual points to the arrested development line.

DW-statistics=1.816493

Explanation. There is a small spot jobs in car correlativity because DW shows value about 2.

Probability=0.0023

Explanation. The variable is important at 0.05 ( 5 % ) important degree or 95 % assurance degree. If the chance less than 0.05, it means that 95 % assurance interval accepted and there is a relationship among dependent variable and independent variable. The independent variable for the export is 0.0023 and this export of palm oil ( supply ) can act upon the monetary value of palm oil. The monetary value of palm oil will act upon if the export more than demand from other state. This sort of scenario happened because it ‘s good to diminish monetary value of palm oil to the trading state, so that the trading state can purchase with inexpensive monetary value. But if the export less than demand from other state, it will act upon the monetary value of palm oil, because our state can sell with high monetary value in order to acquire more net income from other state. It happen when the deficit of the production and demand will maintain increasing every twelvemonth and the export are limited.

Consequence of arrested development between POPt and CONS

Dependent variable: POPt and Independent variable: Con

POPt=0.010169+0.171866t

The coefficient above besides shows the positive relationship between monetary value of palm oil and ingestion of palm oil in the market. It can explained when 1 unit increased ingestion of palm oil will take to increase monetary value of palm oil by 0.171866

t-statistic=0.635418

Reject Ho, because there is no relationship between monetary value and export because t-statistic shows that it is no important and below 2. So ingestion can non act upon the monetary value of palm oil severally.

R-Squared=0.021939

Explanation. There are 2.19 % of the alterations in the dependent variables. Merely the independent variable can be explained the dependent variables. 97.81 % can non be explained by the arrested development analysis due to some skip of independent variables. This R-squared besides show the weak relationship between dependant variable ( monetary value ) and independent variable ( ingestion ) . It means that, when independent variable alteration 1 % , it will consequence to the dependant variable and besides will alter by 2.19 % . Because of the value of R-squared is low, independent variable and dependant variable has a weak relationship.

Std-error=0.270477

Explanation. The smaller the value of SEE, the closer the informations points/actual points to the arrested development line.

DW-statistics=1.704933

Explanation. There are fewer jobs in car correlativity because DW show value about 2. If this value high than 2, it means that there is no job in auotocorrelation.

Probability=0.5332

Explanation. This variable besides important 0.05 ( 5 % ) important degree 95 % assurance degree. If chance less than 0.05, it means that 95 % assurance interval accepted and there is a relationship among dependent variable and independent variable. The chance of this independent variable is 0.5332 and this ingestion can non act upon the monetary value of palm oil because presents, society in Malaysia do n’t cognize what is the utilizations of palm oil, they merely ignore the utilizations of palm oil, they do n’t desire to make a new things from utilizations of palm oil. So this utilizations of palm oil will non consequence to the society and so straight the ingestion of palm oil will non act upon the monetary value of palm oil in the market

Consequence of arrested development between POPt and LANDAREA

Dependent variable: POPt and independent variable: L.AREA

POPt=0.021867+0.097365t

Merely this coefficient above shows the positive relationship between monetary value of palm oil and hectares of landarea. It is average that, 1 unit increased landarea will take to increased monetary value of palm oil by 0.097365

t-statistic=0.249805

Reject Ho, because there is no relationship between monetary values and landarea because t-statistic shows that it is important and below 2. So landarea can non act upon the monetary value of palm oil severally.

R-Squared=0.002306

Explanation. There are 0.23 % of the alterations in the dependent variables. Merely the independent variable can explicate the dependent variables. 99.77 % can non be explained by the arrested development analysis due to some skip of independent variables. R-squared above show the weak relationship between dependant variable ( monetary value ) and independent variable ( landarea ) . It means that, if the independent variable alteration 1 % , the dependant variable besides will alter by 0.23 % . The dependent variable and independent variable has a weak relationship because of the R-squared is low.

Std-error=1.86E-05

Explanation. The smaller the value of SEE, the closer the informations points/actual points to the arrested development line.

DW-statistics=1.47897 0

Explanation. Besides have a job in car correlativity because DW show value less than 2

Probability=0.8046

Explanation. The variable is important at 0.05 ( 5 % ) important degree or 95 % assurance degree. If the chance less than 0.05, it means that 95 % assurance interval accepted and there is a relationship between dependant variable and independent variable. The chance of this independent variable is 0.8046 and these hectares of landarea besides can non act upon the monetary value of palm oil. These hectares of landarea are the factor that can non act upon the monetary value of palm oil, because it involved many phases until the trading procedure. For illustration, the more hectares of palm oil, the more production of palm oil. If production is much and exceed the entire demand in the market, the monetary value of palm oil will diminish because to pull from society to purchase that merchandise. But if the hectares of landarea of palm oil is little, the production besides less and if the demand over than production, the monetary value addition to derive the large net income,

Multiple Arrested development

Test utilizing first difference

Dependent variable=POPt

Coefficient

Probability

Dlnpdc

-2.234175

0.0724

Dlnland

0.417220

0.1939

Dlnexp

1.778560

0.0036

Dlncnsptn

0.794493

0.1748

C

-0.041683

0.4468

TABLE Two

R-squared=0.520161

Durbin Watson=1.511417

Dlnprice=-0.041683+0.794493+1.778560+0.417220-2.234175

We are utilizing the first difference method because we want to do the information important. Before reasoning backward the information utilizing first difference, we must log all the information to do the chance below than 0.05, in order to do the information important. After reasoning backward, we found that merely chance for Dlnexp less than 0.05. Means that merely dlnexp important and can act upon the monetary value of palm oil in the market, other independent variable non important and can non act upon the monetary value of palm oil in the market because the chance shows over than 0.05. R-squared show strong relationship between all independent variable and dependent variable. it means that, 52.01 % alterations in the dependent variables and 47.99 % can non be explained by the arrested development analysis due to some skip of independent variables. In other words said that, if the independent variable alterations 1 % , the dependant variable besides will alter by 52.01 % . DW shows that, there is fewer jobs in autocorrelation because DW show less than 2. Other independent variable non important because of multicollinearity and autocorrelation job. Multicollinearity defined that, there is no additive relationships among the explanatory variables. It is besides can go on when two or more independent variable are related to dependent variable. Autocorrelation can be defined as ‘correlation between members of observations ordered in clip ( as in clip series informations )

Chapter 5

5.1 Decision

Malaysian is the 2nd manufacturer in the universe who produce palm oil. These production of palm oil can better our state economic system by exporting the palm oil market to other state because our state contribute about 90 of palm oil and involves in trading around the universe. Palm oil has many used in our day-to-day life, used of palm oil influence the demand of palm oil in market. More demand of palm oil in market, more increased the monetary value of palm oil per tones.

After finished making this proposal, there are 4 factor that determinant the monetary value of palm oil in Malayan thenar oil market. This 4 factor are production of palm oil, export of palm oil, ingestion of palm oil and hectares of plantation of palm oil. This 4 factor trial one by one to look into whether there is a relationship between this factor to the monetary value. To prove it, we use least square method in econometrics. And this all four factor can act upon the monetary value of palm oil because t-statistic more than 2. Multiple arrested developments besides has been test, and merely one independent variable was important and other independent variable non important.

Recommendation

Government

Government sector should increase the production of palm oil, in order to increase the sum of export to other state. The production of thenar will derive the majority of income in our state, so as a society, we must cognize how to works thenar oil. Then Palm Oil Company must take a measure to get down a concern that trades the production of palm oil to other state.

Research and Development

Research and Development members should make new things that maximize the end product of a individual thenar oil tree so that can increase the sum of production to do a trade to other state. Besides that, R & A ; D members should make a new machine to treat the thenar oil become soap, oil and many more.

Bibliography

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Amna Awad Abdel Hameed ( 2005 ) . An Econometric Study of Palm oil Import Demand in The Middle East and North African Countries, PhD Thesis ( unpublished ) , Universiti Putra Malaysia, Serdang, Selangor.

Ahmad Borhan A Nordin and Mohd Arif Simeh, Recent Developments Of Malayan Palm Oil Stock Level. OIL PALM INDUSTRY ECONOMIC JOURNAL ( VOL. 8 ( 2 ) /2008 )

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APPENDIX 1

PHOTOGRAPHS OF PALM OIL

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Palm Oil Est Ate

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Merchandise of Palm Oil

APPENDIX 2

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Palm oil

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Pieces of Palm oil 1