The path to a sustainable palm oil futures market
This study analyzes the information flow between the palm oil, soybean oil, and crude oil futures markets and proposes ways to develop the vegetable oil market, especially the palm oil futures market. In contrast to the results of a Granger causality test, we provide strong evidence that interactive...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2022-11-01
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| Series: | Energy Reports |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2352484722008137 |
| _version_ | 1797902025830170624 |
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| author | S. Lee E. Yi Y. Cho K. Ahn |
| author_facet | S. Lee E. Yi Y. Cho K. Ahn |
| author_sort | S. Lee |
| collection | DOAJ |
| description | This study analyzes the information flow between the palm oil, soybean oil, and crude oil futures markets and proposes ways to develop the vegetable oil market, especially the palm oil futures market. In contrast to the results of a Granger causality test, we provide strong evidence that interactive cause–effect relationships exist between each pair of the three oil futures markets. Yet, the emergence of the net information flow depends on the trading volume and liquidity (i) from the crude oil futures to the two vegetable oil futures markets and (ii) from the soybean oil futures to the palm oil futures market. Our findings support the fact that the palm oil futures market is still subject to tight investment constraints and, therefore, fails to play a leading role in information discovery regarding the crude oil and soybean oil futures markets. This suggests that policymakers could pursue a series of initiatives, such as introducing US dollar-based trading and extending trading hours, to further develop the palm oil futures market and reduce market friction. |
| first_indexed | 2024-04-10T09:11:17Z |
| format | Article |
| id | doaj.art-a85ee176db244e39a80ca730eef50493 |
| institution | Directory Open Access Journal |
| issn | 2352-4847 |
| language | English |
| last_indexed | 2024-04-10T09:11:17Z |
| publishDate | 2022-11-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Energy Reports |
| spelling | doaj.art-a85ee176db244e39a80ca730eef504932023-02-21T05:11:23ZengElsevierEnergy Reports2352-48472022-11-01865436550The path to a sustainable palm oil futures marketS. Lee0E. Yi1Y. Cho2K. Ahn3Center for Finance and Technology, Yonsei University, South KoreaCenter for Finance and Technology, Yonsei University, South Korea; Pritzker School of Law, Northwestern University, United StatesCenter for Finance and Technology, Yonsei University, South Korea; Department of Industrial Engineering, Yonsei University, South KoreaCenter for Finance and Technology, Yonsei University, South Korea; Department of Industrial Engineering, Yonsei University, South Korea; Corresponding author at: Center for Finance and Technology, Yonsei University, South Korea.This study analyzes the information flow between the palm oil, soybean oil, and crude oil futures markets and proposes ways to develop the vegetable oil market, especially the palm oil futures market. In contrast to the results of a Granger causality test, we provide strong evidence that interactive cause–effect relationships exist between each pair of the three oil futures markets. Yet, the emergence of the net information flow depends on the trading volume and liquidity (i) from the crude oil futures to the two vegetable oil futures markets and (ii) from the soybean oil futures to the palm oil futures market. Our findings support the fact that the palm oil futures market is still subject to tight investment constraints and, therefore, fails to play a leading role in information discovery regarding the crude oil and soybean oil futures markets. This suggests that policymakers could pursue a series of initiatives, such as introducing US dollar-based trading and extending trading hours, to further develop the palm oil futures market and reduce market friction.http://www.sciencedirect.com/science/article/pii/S2352484722008137Palm oil futuresInformation flowInvestment constraintsSustainable market design |
| spellingShingle | S. Lee E. Yi Y. Cho K. Ahn The path to a sustainable palm oil futures market Energy Reports Palm oil futures Information flow Investment constraints Sustainable market design |
| title | The path to a sustainable palm oil futures market |
| title_full | The path to a sustainable palm oil futures market |
| title_fullStr | The path to a sustainable palm oil futures market |
| title_full_unstemmed | The path to a sustainable palm oil futures market |
| title_short | The path to a sustainable palm oil futures market |
| title_sort | path to a sustainable palm oil futures market |
| topic | Palm oil futures Information flow Investment constraints Sustainable market design |
| url | http://www.sciencedirect.com/science/article/pii/S2352484722008137 |
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