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LIST OF ARTICLES

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Article Info

Vol 8 No.1 (2008) p1-11
Changing Market Trends in the Oils and Fats Sector
Sabri Ahmad, Salmiah Ahmad, Faizah Mohd Shariff, N Balu and Nik Abdullah Nik Idris

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Abstract


Changing Market Trends in the Oils and Fats Sector

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.

Keyword(s): OILS AND FAT; MARKET TRENDS-Changes and Development; PALM OIL PRICES; MARKET PERFORMANCE

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Article Info

Vol 7 No.2 (2007) p28-33
Feasibility Study on the Potential Production of Oil Palm Shell Bio-phenol
Wong Chuan Chin, and Farid Nasir Ani

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Abstract


Feasibility Study on the Potential Production of Oil Palm Shell Bio-phenol

The extraction of bio-phenol from oil palm shell is being investigated in Universiti Teknologi Malaysia. In this article, the economic feasibility of producing oil palm shell bio-phenol is studied. Plants of three capacities – 100 t/day, 10 t/day and 1 t/day – are discussed. Their potential profitabilities are assessed, for which an estimation of the initial total investment and the cost of production were derived. The project evaluation and profitability analysis was performed including total capital investment, manufacturing cost, and discounted cash flow analysis. The plants require three years for starting up and their operating life is 17 years with a depreciation of 10% per year. The discounted cash flow rate of return (DCFRR) and the discounted breakeven period (DBEP) are used to access the profitability. From the results, it shows that the bio-phenol extraction plants are feasible and profitable.

Keyword(s): OIL PALM; OIL PALM SHELL; BIO-PHENOL; ECONOMIC FEASIBILITY; PROFITABILITY

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Article Info

Vol 7 No.2 (2007) p19-27
Impact of Palm Oil-based Biodiesel Demand on Palm Oil Price
Ramli Abdullah; Roslan Abas and Ayatollah, K

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Abstract


Impact of Palm Oil-based Biodiesel Demand on Palm Oil Price

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.

Keyword(s): PALM BIODIESEL; PALM OIL PRICES; PALM BIODIESEL-Demand

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Article Info

Vol 7 No.2 (2007) p12-18
Simulation Study on the Availability of Palm Oil Stock
Ahmad Borhan A Nordin; Mohd Arif Simeh; Faizah Mohd Shariff and Norhanani Mohd Baharim

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Abstract


Simulation Study on the Availability of Palm Oil Stock

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.

Keyword(s): PALM OIL; PALM OIL STOCK; PALM OIL PRICES; PALM OIL INDUSRTY-Malaysia

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Article Info

Vol 7 No.2 (2007) p1-11
Recent Development in the World Palm Oil Prices: An Overview
Mohd Basri Wahid; Mohd Arif Simeh and Jamil Nordin

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Abstract


Recent Development in the World Palm Oil Prices: An Overview

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.

Keyword(s): PALM OIL PRICES; TRENDS; CONSUMPTION; TRADE; PRICE COMPETITIVENESS; BIODIESEL

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Article Info

Vol 7 No.1 (2007) p24-32
Price Volatility Spill Over in the Malaysian Palm Oil Industry
Ayat K Ab Rahman; Faizah Mohd Shariff; Ramli Abdullah and Nurul Hufaidah Sharif

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Abstract


Price Volatility Spill Over in the Malaysian Palm Oil Industry

This study examines volatility spill over between the domestic prices of selected palm oil products and the major causative factors of the volatility. Empirically, it was found that palm oil has moderate price volatility and a short-term effect in unidirectional and bi-directional price volatility spill over to the domestic prices of selected palm oil products. Since crude palm oil (CPO) is a price leader among the other selected palm oil products, an effort should be made to stabilize its price to minimize volatility in all the other prices. Using the major causative factors of price volatility, a model was developed to forecast domestic prices for the selected palm oil products. The prices for CPO and RBD palm olein (POL) were forecast and found to be good with error of less than 2% with all the directions for prices correct. Stabilizing the palm oil price can be done through market power by a monopolistic producer or forming a producer cartel or through international commodity agreements between buyers and sellers. It is believed that creating an alliance between Indonesia and Malaysia should boost the bargaining power of both countries in setting the CPO price and control output, thereby reducing the volatility of all palm oil products in the future

Keyword(s): PALM OIL INDUSTRY-Malaysia; PRICE VOLATILITY; PRICE STABILIZATION

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Article Info

Vol 7 No.1 (2007) p18-23
A Study on the Relationship between the Futures and Physical Prices of Palm Oil
Ahmad Borhan A Nordin; Mohd Noor Mamat; Mohd Arif Simeh and Norhanani Mohd Baharin

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Abstract


A Study on the Relationship between the Futures and Physical Prices of Palm Oil

The difference between cash and futures prices is known as basis. It represents the local demand and supply situation as well as the risk factors associated with the physical commodity trade. Forecast basis can be used with the futures prices to predict the cash price of palm oil. In addition, using the expected trends in basis can improve hedging by both buyers and sellers. Forecasts for other crops using basis from simple historical averages compare favourably with the results from more
complex forecasting models. This work investigated the behaviour of crude palm oil (CPO) basis and compared practical methods of forecasting CPO basis by regions in Malaysia using multi-year historical averages.

Keyword(s): OIL PALM & PALM OIL INDUSTRY-Malaysia ; PRICES ; MARKET DEVELOPMENT ; FUTURE TRADING ; MPOB PUBLICATIONS

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Article Info

Vol 7 No.1 (2007) p9-17
Impact Assessment of Liberalizing Trade on Malaysian Crude Palm Oil
Basri Abdul Talib; Mohd Fauzi Mohd Jani; Mohd Noor Mamat and Rosli Zakaria

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Abstract


Impact Assessment of Liberalizing Trade on Malaysian Crude Palm Oil

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.

Keyword(s): OIL PALM & PALM OIL INDUSTRY-Malaysia ; EXPORT DUTIES ; CRUDE PALM OIL (CPO) ; PALM OIL PRICES ; MPOB PUBLICATIONS

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Article Info

Vol 7 No.1 (2007) p 1-8
Technological Development and New Growth Areas of the Oil Palm Industry
Mohd Basri Wahid; Lim, W S and Mohd Arif, S

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Abstract


Technological Development and New Growth Areas of the Oil Palm Industry

Technological development has transformed the Malaysian palm oil industry into a strategic and well planned industry that responds to global challenges. In particular, genetic knowledge since as early as 1912 first led the phenomenal growth of the industry through the planting of tenera instead of dura palms. This was complemented by the government allocating land to the poor and landless to plant more oil palm, in great part causing the area to increase from 54 000 ha in 1960 to 1.02 million hectares in 1980 and 2.03 million hectares in 1990. By 2006, there were 4.16 million hectares of oil palm, constituting nearly two-thirds of the national agricultural area (Table 1). Malaysia continues to be the world’s largest palm oil producer with a production of 15.90 million tonnes in 2006.
The success of the crop is largely market driven with good longterm price prospects for palm oil making oil palm more attractive than most other crops. Palm oil contributes more than one-third of the national agricultural GDP, generating RM 31.81 billion in export earnings in 2006, making it one of the pillars of Malaysia’s economy. At present, the industry employs more than 1.5 million people in the core and related sectors. This paper provides an overview of the technological developments which have propelled the industry into a strategic and important sector and which will shape the future of the oil palm agro industry.

Keyword(s): OIL PALM & PALM OIL INDUSTRY-Malaysia ; ECONOMICS ; RESEARCH & DEVELOPMENT ; PRODUCTIONS ; MPOB PUBLICATIONS

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Article Info

Vol 6 No.2 (2006) p37-48
Labour Constraints in the Plantation Industry
Daud Amatzin

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Abstract


Labour Constraints in the Plantation Industry

In the case of modern Malaysian plantation scenario, there is already ample legislation in place to create conducive labour relations environment as well as to enhance industrial and economic growth. Its main functions are: protection of the economic and social interest of workers, assist in enhancing national productivity and in promoting and preserving industrial harmony in the country. It also encourages employers in the private sector to employ disabled persons, promoting activities to facilitate and improve the planting environment so as to enhance the participation of unutilized workforce into the labour market. Certainly, the quality development of human capital will ensure
continued progress for the nation. Hence, employers are duty-bound to invest in training. However, with a population of about 25 million and a vast area under cultivation of tropical crops such as oil palm, rubber, cocoa and paddy covering about 6 million hectares and a thriving manufacturing, construction and services sectors, intense competition to recruit suitable and available local workers is the norm. Today, it is evident that through the process of Malaysianization, the ownership of plantation equity is predominantly under Malaysian hands. Thus, conflicting priorities set by decision-makers, both in public and private sectors at times create a challenging situation as well, which may be one of the reasons discouraging the local population from being attracted
to plantation life. Overall, there is a shortage of manpower in the plantation sector. In order to sustain economic growth of the country, the government has been pragmatic in their approach to fulfill the manpower needs. Thus, employment of guest workers (generally known as foreign workers) from approved source countries were allowed in order to alleviate the shortage of manpower in certain sectors, including the plantation and construction industry. However, with the influx of
migrant workers with various background and disposition, many challenges are encountered. There has been some tension between the local community and guest workers. Cases of abuse and mistreatment
attracted the media into reporting them as sensational news and may have influenced policy-makers. Policies change frequently, employer’s dependency on guest workers increases with the area under cultivation. Local workers shun the plantation sector in favour of better working environment in and around urban setting. Over reliance on one particular group of guest workers has proved to bring negative impact. Additionally, of late (05/05/05), the Prime Minister (PM) had just outlined that addiction to cheap foreign labour as being one of the three Malaysian few bad habits, If we are not serious about combating this problem, maybe it is time for us to venture into other businesses which

Keyword(s): OIL PALM ESTSATES & PLANTATIONS ; LABOUR SHORTAGE ; FOREIGN LABOUR ; IMMIGRANT LABOUR ; MPOB PUBLICATIONS

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© Malaysian Palm Oil Board (MPOB). All Rights reserved.
No part of this publication may be reproduced, stored in a retrieval system,
in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the publisher.

This online publication is electronically compiled by Palm Information Centre, Malaysian Palm Oil Board (MPOB)
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