A Critical Analysis of the Resolution of the Sharīʻah Advisory Council of Securities Commission Malaysia : A Case Study of the Crude Palm Oil Futures Contract

2013 ◽  
Vol 5 (2) ◽  
pp. 141-146
Author(s):  
Noor Suhaida Kasri
Keyword(s):  
Palm Oil ◽  
Critical Analysis ◽  
Advisory Council ◽  
Crude Palm Oil ◽  
Oil Futures ◽  
Futures Contract

EFFECTIVE CROSS HEDGING: EVIDENCE FROM PHYSICAL CRUDE PALM OIL AND ITS INTER-RELATED AGRICULTURAL FUTURES CONTRACTS

2018 ◽  
Vol 17 (2) ◽  
pp. 123
Author(s):  
Noryati Ahmad ◽  
Ahmad Danial Zainudin ◽  
Fahmi Abdul Rahim ◽  
Catherine S F Ho
Keyword(s):  
Palm Oil ◽  
Futures Contracts ◽  
Crude Palm Oil ◽  
Oil Futures ◽  
Futures Contract ◽  
Agricultural Futures ◽  
Cross Hedging ◽  
Optimal Hedge ◽  
Excessive Speculation ◽  
Chicago Board Of Trade

Since its establishment, Crude Palm Oil futures contract (FCPO) has been used to directly hedge its physical crude palm oil (CPO). However, due to the excessive speculation activities on crude palm oil futures market, it has been said to be no longer an effective hedging tool to mitigate the price risk of its underlying physical market. This triggers the need for market players to find possible alternatives to ensure that the hedging role can be executed effectively. Thus this investigation attempts to examine whether other inter-related grains and oil seed futures contracts could serve as effective cross-hedging mechanisms for the CPO. Weekly data of inter-related futures contracts from Chicago Board of Trade (CBOT) and Dalian Commodity Exchange (DCE) are employed to cross hedge the physical crude palm oil prices. The study starts from 2006 until 2016. Empirical results indicate that FCPO is still the best futures contract for hedging purposes while Chicago Soybean (CBOTBO) provides second best alternative if cross-hedging is considered. Keywords: Crude palm oil, Crude palm oil futures, Cross Hedging, Optimal Hedge Ratio, Effective Hedging

scholarly journals Does Trading Volume explain the Information Flow of Crude Palm Oil Futures Returns?

2020 ◽  
Vol 12 (2) ◽  
pp. 115-136
Author(s):  
You-How Go ◽  
◽  
Wee-Yeap Lau ◽  
Keyword(s):  
Palm Oil ◽  
Trading Volume ◽  
Futures Market ◽  
Sensitive Information ◽  
Crude Palm Oil ◽  
Futures Trading ◽  
Oil Futures ◽  
Futures Contract ◽  
Information Set

This study examines the role of trading volume in the crude palm oil (CPO)futures market as a proxy for information áow from the perspective of the mixture-of-distributions hypothesis (MDH). Using the data from January 2000 to April 2017, a sym-metric GARCH model has been estimated, in which the residuals follow alternatively thenormal Student-t and generalised error distribution. An alternative augmented model thatconsists of trading volume as an exogenous variable is estimated with the same error dis-tributions. Our results suggest several conclusions: First, the trading volume could not actas a true proxy for information áow. This indicates that volume of futures trading containsrelatively less price-sensitive information. Secondly, the inclusion of trading volume into theconditional variance equation with Student-t distributed errors is important for modellingpurposes when the returns are leptokurtic and positively skewed. Hence, it can be concludedthat the use of return and trading volume will enhance the current information set usedby practitioners and analysts in pricing the CPO futures contract when there exists a highdegree of leptokurtosis in the returns. This is the Örst study that validates the MDH in thecontext of the CPO futures market

Effective cross hedging: Evidence from physical crude palm oil and its non-interrelated energy futures contracts

2019 ◽  
Vol 7 (2) ◽  
pp. 1
Author(s):  
Ahmad Danial Zainudin ◽  
Noryati Ahmad ◽  
Fahmi Abdul Rahim
Keyword(s):  
New York ◽  
Palm Oil ◽  
Variance Reduction ◽  
Least Square ◽  
Futures Contracts ◽  
Crude Palm Oil ◽  
Oil Futures ◽  
Energy Futures ◽  
Futures Contract ◽  
Cross Hedging

Recent researchers found that Crude Palm Oil Futures contract (FCPO) in Bursa Malaysia Derivatives is no longer an effective hedging tool to mitigate the price risk in cash market due to the excessive speculation trading activities. This is very alarming to the hedgers hence possible hedge pair alternatives to crude palm oil physical must be identified to ensure that the hedging can be executed effectively. Therefore in this study, Ordinary Least Square, bivariate VAR and bivariate VECM were used to examine whether the non-interrelated energy futures contracts could serve as effective cross-hedging mechanisms for the CPO. Weekly data of agricultural and energy futures contracts from Intercontinental Exchange (ICE), New York Mercantile Exchange (NYMEX), and Tokyo Commodity Exchange (TOCOM) are employed to cross hedge the physical crude palm oil prices. The study starts from 2006 until 2016. Empirical results indicate that bivariate VECM gives more hedging variance reduction. Surprisingly, overall FCPO is still the best futures contract for hedging purposes while Japanese crude oil futures (TOCOM) represents the energy futures market as the best cross hedge alternatives for CPO.

scholarly journals Open outcry versus electronic trading: Tests of market efficiency on crude palm oil futures

2018 ◽  
Vol 38 (6) ◽  
pp. 673-695 ◽  
Author(s):  
Stuart Snaith ◽  
Neil M. Kellard ◽  
Norzalina Ahmad
Keyword(s):  
Market Efficiency ◽  
Palm Oil ◽  
Electronic Trading ◽  
Crude Palm Oil ◽  
Oil Futures ◽  
Open Outcry

Crude Palm Oil Futures

2014 ◽  
pp. 381-390
Author(s):  
Jawwad Ahmed Farid
Keyword(s):  
Palm Oil ◽  
Crude Palm Oil ◽  
Oil Futures

scholarly journals Modelling Commodity Futures Prices: The Case of Crude Palm Oil Futures

2019 ◽  
Vol 24 (Supp.1) ◽  
pp. 61-78
Author(s):  
Khalil Ahmed ◽  
◽  
Zurina Shafii ◽  
Amir Shaharuddin ◽  
Nur Azira Mohd ◽  
...  
Keyword(s):  
Palm Oil ◽  
Commodity Futures ◽  
Futures Prices ◽  
Crude Palm Oil ◽  
Oil Futures

scholarly journals Process Debottlenecking and Retrofit of Palm Oil Milling Process via Inoperability Input-Output Modelling

2018 ◽  
Vol 152 ◽  
pp. 01012 ◽  
Author(s):  
May May Tan ◽  
Viknesh Andiappan ◽  
Yoke Kin Wan
Keyword(s):  
Palm Oil ◽  
Production Capacity ◽  
Algebraic Approach ◽  
Milling Process ◽  
Screw Press ◽  
Economic Feasibility ◽  
Cost Ratio ◽  
Input Output ◽  
Crude Palm Oil

In recent years, there has been an increase in crude palm oil (CPO) demand, resulting in palm oil mills (POMs) seizing the opportunity to increase CPO production to make more profits. A series of equipment are designed to operate in their optimum capacities in the current existing POMs. Some equipment may be limited by their maximum design capacities when there is a need to increase CPO production, resulting in process bottlenecks. In this research, a framework is developed to provide stepwise procedures on identifying bottlenecks and retrofitting a POM process to cater for the increase in production capacity. This framework adapts an algebraic approach known as Inoperability Input-Output Modelling (IIM). To illustrate the application of the framework, an industrial POM case study was solved using LINGO software in this work, by maximising its production capacity. Benefit-to-Cost Ratio (BCR) analysis was also performed to assess the economic feasibility. As results, the Screw Press was identified as the bottleneck. The retrofitting recommendation was to purchase an additional Screw Press to cater for the new throughput with BCR of 54.57. It was found the POM to be able to achieve the maximum targeted production capacity of 8,139.65 kg/hr of CPO without any bottlenecks.

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