Journal Screenshot

International Journal of Academic Research in Business and Social Sciences

Open Access Journal

ISSN: 2222-6990

The Macroeconomic Factors on Malaysia’s Future Crude Palm Oil (FCPO)

Nurulain Rizal, Syazwina Asilah Saifuddin, Siti Hawa Aisyah Abd Rahim, Nurnadhirah Mohd Nazri, Muhammad Syahmie Ab Aziz, Amir Imran Zainoddin

http://dx.doi.org/10.6007/IJARBSS/v13-i3/16474

Open access

Over the past few years, there has been much interest regarding the Futures Crude Palm Oil (FCPO) in Malaysia. Its volatility in particular, has drawn a lot of concern and has become the focus of discussion in several studies. This study attempts to contribute to the research by examining the macroeconomic variables on Malaysia’s Crude Palm Oil from the year 1990 to 2021. It is crucial to identify the factors in order to have a better control regarding the FCPO price uncertainties. The primary question that is being addressed here is whether the macroeconomic variables affect the price of FCPO. Moreover, a selection of independent variables was chosen in this study, namely Gross Domestic Product (GDP), Interest Rate (IR) and Inflation Rate (CPI). Meanwhile the dependent variable would be FCPO price. All data were sourced from The World Bank and Trading Economics. For analysis, this study employed the methods of Descriptive Analysis, Regression Analysis, Normality Test and Correlation Analysis. Overall, the results found that GDP and IR have a significant and positive relationship with the price of FCPO, with IR as the most significant variable. The study also revealed that CPI has no significant relationship with the price of FCPO and, in fact, negatively affected it. The results of this research may assist the Malaysian government, as well as private and palm oil sectors to take better initiatives to control the volatility of FCPO and boost the growth of CPO in Malaysia.

Ahmed, A. E.-S. (2018). Relationship between Crude Oil Price Fluctuations and Inflation in Oman (1990-2017). GCNU Journal ISSN: 1858-6228, 2 - 17.
Mukrim, A. M. M. (2017). The Impact of Macroeconomic Variables on The Crude Palm Oil Export: Malaysian. Munich Personal RePEc Archive (MPRA), 1-19.
Applainadu, A. S. (2011). An Econometric Analysis of the Link between Biodiesel Demand and Malaysian Palm Oil Market. International Journal of Business and Management, 35 - 45.
Jalil, A. S. A. (2021). Commodities Sector Gains Amid Higher Inflation. Retrieved from The Malaysian Reserve: https://themalaysianreserve.com/2021/06/04/commodities-sector-gains-amid-higher-inflation/
Baharim, A. T. (2019). Macroeconomic Factors That Affect Crude Palm Oil Price in Malaysia . UiTM Institutional Repositories, 2.
Balu Nambiappan, A. I. (2018). Malaysia: 100 Years of Resilient Palm Oil Economic Performance. Journal of Palm Oil Research Vol. 30 (1), 13-25.
Bhandari, P. (2021). Correlation vs. Causation | Difference, Designs & Examples. Retrieved from Scribbr: https://www.scribbr.com/methodology/correlation-vs-causation/#:~:text=What's%20the%20difference%20between%20correlational
Bursa Malaysia. (n.d.). Crude Palm Oil Futures (FCPO). Retrieved from Bursa Malaysia: https://www.bursamalaysia.com/trade/our_products_services/derivatives/commodity_derivatives/crude_palm_oil_futures
Bursa Malaysia. (n.d.). Crude Palm Oil Futures (FCPO) Frequently Asked Questions (FAQ). Retrieved from Bursa Malaysia: https://www.bursamalaysia.com/sites/5d809dcf39fba22790cad230/assets/5e0aefb539fba27b8a3efba2/FCPO_Physical_Delivery_FAQ_Dec2019.pdf
Fernando, J. (2022). Gross Domestic Product (GDP): Formula and How to Use It. Retrieved from Investopedia: https://www.investopedia.com/terms/g/gdp.asp
Ganesh, V. S. (2022). Marked Increase In Palm Oil Exports and Palm-oil Based Products From Jan-June This Year. Retrieved from New Straits Time: https://www.nst.com.my/news/nation/2022/08/820754/marked-increase-palm-oil-exports-and-palm-oil-based-products-jan-june
Murshidi, H. A. (2017). The Impact of Price Shocks of Crude Oil, Palm Oil and Rubber. Proceedings of International, 421-437.
Ignatius, C. (2022). Palm Oil Is Here To Stay. Retrieved from Business Today: https://www.businesstoday.com.my/2022/11/04/palm-oil-is-here-to-stay/
Izmir, N. H. (2020). PENJANA's Tax Exemption Augurs Well For Palm Oil. Retrieved from BERNAMA.com: https://www.bernama.com/en/business/news_penjana.php?id=1848798
Ahmed, K. M. Z. (2020). The Impact of Macroeconomic Variables on Commodity Futures Prices: An Evidence from Malaysian Crude Palm Oil Futures (FCPO). European Journal of Molecular & Clinical Mecicine, 2095-2105.
Kondalamahanty, A. (2022). Heavy Rains in Peninsular Malaysia Drive Palm Oil Supply Concerns. Retrieved from S&P Global Commodity Insights: https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/agriculture/010422-heavy-rains-in-peninsular-malaysia-drive-palm-oil-supply-concerns
Lee, E. (2022). The State of the Nation: Why It’s Difficult to Predict the Direction of Commodity Prices. Retrieved from The Edge Markets: https://www.theedgemarkets.com/article/state-nation-why-its-difficult-predict-direction-commodity-prices
Killian, L. T.-L. (2011). Does the Fed Respond to Oil Price Shocks? The Economic Journal, 1-26.
Killian, L. X. Z. (2020). Oil Prices, Exchange Rates and Interest Rates. Federal Reserve Bank of Dallas, 1-45.
Malaysian Palm Oil Council (MPOC). (2012). Monthly Palm Oil Trade Statistics, 2012. Retrieved from Malaysian Palm Oil Council (MPOC): https://mpoc.org.my/monthly-palm-oil-trade-statistics-2012/
Malaysian Palm Oil Council (MPOC). (2020). Malaysian Palm Oil Industry. Retrieved from Malaysian Palm Oil Council (MPOC): https://mpoc.org.my/malaysian-palm-oil-industry/
Malaysian Palm Oil Council (MPOC). (n.d.). About Palm Oil. Retrieved from Malaysian Palm Oil Council (MPOC): https://mpoc.org.my/about-palm-oil/
Malaysian Palm Oil Council (MPOC). (n.d.). Palm Oil and The Environment. Retrieved from Malaysian Palm Oil Council (MPOC): https://mpoc.org.my/palm-oil-and-the-environment/
Bodenstein, M. L. G. (2012). Monetary Policy Responses to OilPrice Fluctuations. IMF Economic Review 60, 470-504.
Isa, M. A. M. A. T. (2020). Crude Palm Oil Price Fluctuation in Malaysia. International Journal of Academic Research in Business and Social Sciences, 10(5), 879-892. Retrieved from International Journal of Academic.
Alias, M. H. F. M. (1992). Market Share Analysis of Malaysia's Palm Oil Exports: Implications on its Competitiveness. Jurnal Ekonomi Malaysia 26 , 3-20.
Pettinger, T. (2018). Real Business Cycle. Retrieved from Economics Help: https://www.economicshelp.org/blog/143326/economics/real-business-cycle/
Rahman, K. A. (2013). Impact of Palm Oil Supply and Demand on Crude Palm Oil Price Behavior. Retrieved from Malaysian Palm Oil Board (MPOB): https://www.pointers.org.my/slide/slide116.pdf
Kaihatsu, S. M. K. (2018). Interaction between Business Cycles and Economic Growth. Bank of Japan Working Paper Series, 4-5.
The Chicago Mercantile Exchange Group. (2019). CME Group Strategic Partnership with Bursa Malaysia Derivatives Berhad (BMD). Retrieved from CME Group: https://www.cmegroup.com/international/partnership-resources/bursa-resources.html
The Star. (2022). CPO Prices to Remain Elevated For Rest of 2022. Retrieved from The Star: https://www.thestar.com.my/business/business-news/2022/07/13/cpo-prices-to-remain-elevated-for-rest-of-2022#:~:text=in%20the%20second%20half%20of,disrupts%20the%20sunflower%20oil%20supply.
The World Bank. (n.d.). GDP Growth (Annual %) - Malaysia. Retrieved from The World Bank: https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=MY
The World Bank. (n.d.). Malaysia: Overview. Retrieved from The World Bank: https://data.worldbank.org/country/malaysia
The World Bank. (n.d.). World Bank Open Data. Retrieved from The World Bank: https://data.worldbank.org/
Trading Economics. (n.d.). About Us. Retrieved from Trading Economics: https://tradingeconomics.com/about-te.aspx

In-Text Citation: (Rizal et al., 2023)
To Cite this Article: Rizal, N., Saifuddin, S. A., Nazri, S. H. A. A. R. N. M., Aziz, M. S. A., & Zainoddin, A. I. (2023). The Macroeconomic Factors on Malaysia’s Future Crude Palm Oil (FCPO). International Journal of Academic Research in Business and Social Sciences, 13(3), 268 – 280.