Estimating Factors That Affect Domestic CPO Prices in The Short And Long Term Using The ECM Approach

This title will be presented on Friday, December 15, 2023 at 13.55-14.05 GMT+7

Abstract

This title has been presented on Friday, December 15, 2023 at 13.15-13.25 GMT+7

Crude palm oil (CPO) is an agricultural commodity that is Indonesia's leading export product and used as raw materials to meet the needs of domestic industries such as the food industry. The aim of this research was to analyze the factors that influence domestic Indonesian CPO prices in the short and long term. This research uses an econometric approach with Error Correction Model (ECM) analysis employed by econometric and time series data from 1981 to 2021 from GAPKI, BPS, Ministry of Energy and Mineral Resources, Index Mundi, Ministry of Agricultural, Ministry of Trade, and BI. The results of this research show that in the short term, Indonesia's domestic CPO prices are significantly influenced by CPO international price and Rupiah exchange rate to USD (at 1% level) and soybean oil price (at 5% level). Soybean oil price shows a negative relationship to the domestic CPO price of Indonesia. In the long run, Indonesia's domestic CPO prices are significantly influenced by CPO export volume, Rupiah exchange rate to USD, soybean oil prices, and CPO export tax. Government policies in the domestic and international markets for CPO-based products need to pay attention to CPO price movements and exchange rates.

This work is licensed under a Creative Common Attribution-Author 4.0 International License.

This license enables reusers to distribute, remix, adapt, and build upon the material in any medium or format, so long as attribution is given to the creator. The license allows for commercial use.