| With the rapid expansion of palm oil area and replanting of oil palm plantation, particularly in Indonesia and Malaysia, world palm oil production will increase significantly. The improvement of processing technology also will lead to further increase in world palm oil supply. Indonesia and Malaysia as the major producers and exporters of palm oil, in the world oils and fats market are still facing market distortions, especially from the EC, U.S. and other major importers. The market become more competitive because most importing countries are also producers of palm oil substitutes such as soybean oil, sunflowerseed oil, rapeseed oil and olive oil.; Trade regulations through tariffs and non-tariff barriers, and internal support to farmers have a great influence over import demand, especially in countries producing competitive products to palm oil. Changes in trade policies of the importing countries will affect the quantity and price of world palm oil demand. Furthermore, it may have a direct impact on the price and quantity of Indonesian and Malaysian palm oils.; In this study, based on the SWOPSIM modeling framework, world trade of palm oil and related oil is divided into nine regions: Indonesia, Malaysia, China, Pakistan, the European Community, the United States, India, Kenya and the Rest of the World. Based on the quantity supply and demand of the oils in the world market, the commodities included in this model are: palm oil, soybean oil, sunflowerseed oil, and rapeseed oil that represent about 75 percent of world vegetable oils.; Eight scenarios of various trade policy changes in the international market of palm and related oils have been analyzed in this simulation model. In general, trade liberalization will affect world price as well as domestic producer and consumer prices. The changes in domestic prices will affect domestic supply and demand, which in turn will affect world trade of palm oil and other related oils. The price and cross price elasticities as well as supply growth, income and population also have a significant impact on the net trade of palm and other related oils. |
