Price relationships in international vegetable and palm oil trade

G. R. Griffith

European Review of Agricultural Economics, 1978, vol. 5, issue 1, 21-34

Abstract: Summary From a number of viewpoints it is becoming increasingly important that price relationships within the international fats and oils complex are recognized and understood. To this end, this paper examines the relationships between the European import prices of major vegetable and palm oils. Spectral and crossspectral analyses are applied to monthly data covering the period January 1959 to December 1971. Emphasis is directed toward the substitutability between the various oils and the implications these substitution patterns have for the feasibility of buffer stock proposals. The results indicate that the prices of oils with similar characteristics and similar end uses are highly correlated, thus the substitutability between them is, in general, strong. Conversely, the prices of dissimilar oils are largely independent, so the substitutability between them is weak. The other crossspectral statistics generated also provide valuable information about the relative stability of various prices and the timing relationships between them.

Date: 1978
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