Asymmetric adjustments in the Thai palm oil market

Authors

  • Patchaya Songsiengchai Faculty of Economics and Management, Universiti Putra Malaysia, 43400, UPM Serdang, Malaysia
  • Shaufique F. Sidique Faculty of Economics and Management, Universiti Putra Malaysia, 43400, UPM Serdang, Malaysia
  • Marcel Djama Institute of Agricultural and Food Policy Studies, Universiti Putra Malaysia, 43400, UPM Serdang, Malaysia
  • W.N.W. Azman-Saini Faculty of Economics and Management, Universiti Putra Malaysia, 43400, UPM Serdang, Malaysia

Keywords:

asymmetric adjustment, cointegration, palm oil, Thailand

Abstract

Drastic movements of global commodity prices and their impact on the Thai palm oil
market is a major concern due to Thailand being the third largest producer of crude palm
oil (CPO). Although the country is not a net importer, global price changes of the commodity
can transmit to domestic markets for palm oil products. This paper analyzed the
transmission of Malaysian CPO and world crude oil price changes to the changes in the
Thai CPO price using an asymmetric error correction model. The price data used in this
paper covers the period from January 1996 to September 2015. The findings showed that
the speed of adjustments towards long-run equilibrium were asymmetric and the effects
of the world prices on Thai CPO price were significant in both positive and negative deviations.
This result calls for policy measures to mitigate the impact of global price
movements because CPO is an essential intermediate input in various products and any
changes in the Thai CPO price definitely affects the welfare of domestic consumers.

Author Biographies

Patchaya Songsiengchai, Faculty of Economics and Management, Universiti Putra Malaysia, 43400, UPM Serdang, Malaysia

a Faculty of Economics and Management, Universiti Putra Malaysia, 43400, UPM Serdang, Malaysia
b Faculty of Management Science, Nakhon Ratchasima Rajabhat University, Nakhon Ratchasima, 30000, Thailand

Shaufique F. Sidique, Faculty of Economics and Management, Universiti Putra Malaysia, 43400, UPM Serdang, Malaysia

a Faculty of Economics and Management, Universiti Putra Malaysia, 43400, UPM Serdang, Malaysia

c Institute of Agricultural and Food Policy Studies, Universiti Putra Malaysia, 43400, UPM Serdang, Malaysia

Marcel Djama, Institute of Agricultural and Food Policy Studies, Universiti Putra Malaysia, 43400, UPM Serdang, Malaysia

c Institute of Agricultural and Food Policy Studies, Universiti Putra Malaysia, 43400, UPM Serdang, Malaysia
d Cirad, UMR Moisa e Marches, Organisations, Institutions et Strategies d’Acteurs, 34398, Montpellier Cedex 5, France

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Published

07-06-2018

How to Cite

Songsiengchai, P., Sidique, S. F., Djama, M., & Azman-Saini, W. (2018). Asymmetric adjustments in the Thai palm oil market. Kasetsart Journal of Social Sciences, 41(1), 220–225. Retrieved from https://so04.tci-thaijo.org/index.php/kjss/article/view/231630

Issue

Vol. 41 No. 1 (2020): January-April

Section

Research articles

License

Copyright (c) 2018 Kasetsart University

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