Can Importing Countries Obtain International Pricing Power for Commodity Futures?—Taking Palm Oil as an Example

Based on the 2010 to 2017 palm oil futures price data of China Dalian Commodity Exchange, Bursa Malaysia Derivatives Berhad and Indonesia Commodity & Derivatives Exchange, this paper empirically analyzed the price discovery function of palm oil futures markets in China, Malaysia and Indonesia. It is found that as an important importing country, China does not yet have the international pricing power of palm oil futures, and Malaysia is the international pricing center of palm oil. There is a threshold effect in the international transmission of palm oil futures prices. When the error correction term is greater than 0.383, Indonesia's palm oil futures prices will have a significant impact on the Chinese market. A further discussion shows that closeness and virtualization are two of the main reasons for the lack of international pricing power in China's futures market: expanding opened-up is the only way for China's futures market to obtain international pricing power; and serving the development of real economy is the fundamental policy for the development of futures market.