Fatty Acid Prices Show Global Divergence: Bullish in Asia and North America, Bearish in Europe

September Fatty Acid prices have registered hybrid sentiments in the Global market. Overall, Asian and North American Fatty Acid markets have witnessed a bullish nature, while European Fatty Acid prices have shown conflicting behavior.

Fatty Acid prices in the North American market have been hovering around USD 1690 per metric tonne, DEL USGC, in September, a little higher than the previous month's trading prices due to strong demand from Asian continents. The consumer price index in North America has risen by 0.4% in September against August CPI, while retail sales have registered steady growth. The pharmaceutical retail sales business score has dropped by 11 in the past month; however, September has shown little improvement.

The prices of Fatty Acids in the Asian market have continued to follow the bullish trend in the month of September since festive sales are on the top. In India, Fatty Acid prices have been traded at USD 1238 per metric tonne, while in Indonesia, Fatty Acid has registered a price of USD 1060 per metric tonne, FOB Tanjung Priok. At a time when exports have been impacted by the economic slowdown in parts of the world, strong domestic demand has been playing a major role in India. Consumer Goods registered a healthy sale in the September quarter, with rural demand also seen to be strong.

Indonesia has raised its crude palm oil reference prices for Oct 1-15. Moreover, it has been noticed that Palm oil future contracts for Nov-Dec have risen in the Malaysia Derivative Exchange, indicating strong festive demand for Fatty Acid in the end-using industry.

It must be noted that the adverse weather caused by El Nino has impacted palm oil production amid rising demand for consumer care products, which, on average, have continued supporting the Fatty Acid price hike. According to the US weather forecast arm, CPC (Climate Production Centre), El Nino will likely peak in Nov-Dec month, provoking producers in supplier countries to maintain enough inventory for upcoming winter demand in personal care markets.

However, unlike Asia and America, Fatty Acid prices in Germany have continued the bearish trend in September since the economy has been stumbling with weak consumer confidence. Fatty Acid prices as of September 29 have been valued at USD 5770 per metric tonne, FOB Hamburg. EU's deforestation-Free Regulation (EUDR) upon El Nino's impacts has threatened the palm oil import volume from major supplier countries. Meanwhile, under an uncertain energy market, Consumer has been reluctant to invest their savings in luxurious goods. Shopping mall activity has also reported a drop in September.

Due to the adverse weather impact of El Nino, harvested cereals volume from Indonesia and Malaysia marketed to Europe have declined. Furthermore, due to a sluggish economy, regional investors have diverted towards overseas markets like China. As per sources, Malaysia has been looking for alternative options for palm oil markets rather than Europe due to the EU's deforestation strategies. 

The Composite Purchasing Manager Index (PMI) has improved from August's 46.6 to 47.1 in September, indicating slow growth, though it has been below 50. Moreover, the market has been keeping an eye on the next US Federal decisions on rates and Brent crude futures.