Fatty Acid Prices Decline in Germany Amidst Poor Demand and Increased Palm Oil Inventory

Fatty Acid prices in Europe's biggest economy, Germany, dropped in August and have been trading at USD 5988 per metric ton, FOB Hamburg, Germany, with a decline of 6% compared to the previous month. Poor demand in the downstream personal care industry amid a slowdown in the overall economic growth of Germany has forced the Fatty Acid market to move downward in the following month. Ample production and inventory in Malaysia have further supported the import prices of Palm oil.

As per the data from the Malaysian Palm Oil Board (MPOB), Palm oil stocks in Malaysia have risen by 22.6% to 2.14 million tonnes when compared to the previous month's inventory. The production of crude palm oil has increased by 8.8% from July to 1.75 million tons in the month of August, while the export volume has fallen to 1.22 million tons when compared to the previous month, MPOB said.

Fatty Acids, especially stearic acid and lauric acid, in the consumer goods industry have remained minimal amid a sluggish economy. The total number of Fatty Acid shipment orders has registered a drop compared to the past month.

The EU deforestation concerns have worked as a backlash against the Palm oil market in the oil's biggest producer countries, Indonesia and Malaysia. Which further supported the downturn in Fatty Acid prices. The two leaders in the Palm oil industry have been trying to boost their domestic use by encouraging jet fuel producers and expanding biodiesel programs.

Earlier in August, it was announced that Malaysia would stop exporting palm oil to Europe due to the implementation of EU law strictly reducing product sales in response to protect the forest. However, the EU's ambassador to Malaysia later confirmed that they have not banned any export from Malaysia, which can affect their palm oil product industry, maintaining sustainability.

However, the Fatty Acid demand in personal care and cleaning products is projected to see a boom globally from next month due to the upcoming festival season in Southeast Asia's major consumers of Fatty Acid, China and India. Furthermore, automotive sales in Germany are set to increase due to a growing preference for EVs. Which further might support the Fatty Acid use as a lubricator or specialized greases in cars.

The erratic monsoon due to El Nino has been affecting Palm oil production in Southeast Asian countries, which further support future Fatty Acid price hike. Moreover, due to drought and extreme floods caused by climate change, European countries like Spain, Italy, and Greece have been suffering in crop production, which might also affect the contender olive oil market.