THE IMPACT OF PETROLEUM PRICES ON VEGETABLE OILS PRICES: EVIDENCE FROM COINTEGRATION TESTS

Abstract

This paper investigate the long-term relationship between the petroleum and vegetable oils prices represented by palm, soybean, sunflower and rapeseed oils prices. To that end, the bivariate cointegration approach using Engle-Granger two-stage estimation procedure is applied. The study utilises monthly data over the period of January 1983 through March 2008. The results provide a strong evidence of long-run equilibrium relation between the two products prices. The estimates of the error correction models reveal a unidirectional long-run causality flowing from petroleum to each of the vegetable oils prices under study.Vegetable oils prices, petroleum prices, cointegration, causality tests, Agribusiness, Demand and Price Analysis, Marketing, Q11 Agricultural Prices,