Export Ban on Indonesian Palm Oil sends Shock Waves to Global Fatty Acid Market
- 27-Apr-2022 3:18 PM
- Journalist: Gabreilla Figueroa
This week, the Global Fatty Acid market started to trace back on the upward price trajectory after being down for the past few weeks. The demand from the downstream detergent players rebounded when the end-user consumption escalated. More importantly, the upstream Palm Oil prices are rallying uphill as the market prepares for the export ban imposed by the biggest producer, Indonesia.
Palm Oil prices rose effectively as the traders prepared their charts for the commencement of Indonesia's export halt, which will take effect from 28th April. The refiners were heard buying healthy amounts this week. Meanwhile, the second-largest producer, Malaysia, has been witnessing increased global demand because of tight supplies from the top exporter. At first, it was the Domestic Market Obligation (DMO) and now the export ban that has impacted the Indonesian Palm Oil exports to the Market worldwide. In the first quarter of 2022, the Malaysian palm market share increased by approximately 16 percent. Adding to this, Plantation Industry and Commodities Minister, Kamaruddin said that Malaysia is confident it can fulfill the global demand for Palm Oil after Indonesia's announcement of banned exports. The supplies will be sufficient for the downstream Market as the production is expected to rise in the coming weeks with a sorted labour shortage issue, he said. Accordingly, the Palm oil July contract futures inclined on Monday, surging nearly 6 percent and accounted for more than USD 1500 per Metric ton in Kuala Lumpur.
However, in order to secure supply for the domestic market, the world's largest palm oil producer and exporter, Indonesia also stated that the temporary suspension does not violate World Trade Organization's standards.
As per ChemAnalyst, "the prices of Global Fatty Acid are expected to stay buoyant in the upcoming weeks on the back of tightening supplies and soaring Palm value. No sign of correction can be seen in the near term as a consequence of the Indonesian export halt. Also, the demand from the regional detergent, cosmetic and lubricant industries is likely to be firm, propelling Fatty Acid market growth."