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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 assessed on the consumption, trade, price competitiveness, investment
in oil palm/palm oil and the use of palm oil for producing biodiesel.
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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 psychological 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, while 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 psychological stock level that implies
also the supply reliability of Malaysian palm oil.
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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.
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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.
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