Testing for price transmission in Thailand’s oil palm and palm oil markets: an empirical study using time series analysis
This study aims to analyze the price transmission within the supply chains of Thailand’s oil palm and palm oil markets. The study employs time-series data from January 2012 to December 2019, which comprises 96 monthly price samples, using econometric analysis, namely, the ADF unit root, Granger causality, co-integration, and error correction model. The empirical results show that (1) there are four causal relationships from crude palm oil price running to palm fruit price, the wholesale price of bottle-refined palm oil, and the retail price of bottle-refined palm oil, and from the wholesale price of bottle refined palm oil running to the wholesale price of gallon refined palm oil. The results further reveal that (2) the palm fruit price has the highest price transmission efficiency, followed by the wholesale price of bottle-refined palm oil, the retail price of bottle-refined palm oil and the wholesale price of gallon refined palm oil. The findings conclude that the crude palm oil price influences the pricing in Thailand’s oil palm and palm oil markets.
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