The Volatility Analysis of Oil Palm Prices in Thailand
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Abstract
Oil palm prices are volatile depending on changing economic situations. During oil palm shortages, palm oil prices rise, but during normal periods, prices may decrease or remain stable. Therefore, as a guideline for planning oil palm planting for farmers, this research aimed to study the volatility of oil palm prices in 7 provinces in Thailand, including Surat Thani, Krabi, Chumphon, Trang, Satun, Chonburi, and Nakhon Si Thammarat. Daily data collected by the Ministry of Commerce from January 2017 to November 2023, totaling 1,652 days, were used. The results of this study were divided into three parts: 1) The volatility test using Generalized Autoregressive Conditional Heteroscedasticity (GARCH) found that the volatility of oil palm prices in the 7 provinces can be explained by past price volatility and past unpredictable events, with past price volatility having a greater explanatory power than past unpredictable events. 2) Past price volatility had the greatest impact on oil palm prices in Trang Province, followed by Satun, Chonburi, and Nakhon Si Thammarat, while Chumphon Province experienced the least impact. In contrast, past unpredictable events had the highest impact in Chumphon Province, followed by Surat Thani, Krabi, and Satun, with Nakhon Si Thammarat experiencing the lowest impact. 3) The study of average returns and investment risk in oil palm planting found that Trang Province, which had the highest average returns, was not the province with the highest risk. This finding is because the area in Trang Province is suitable for growing oil palms, resulting in high production quality and average returns
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