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Tight Supply and Severe Weather Conditions may further Spike Malaysian Glycerine Prices

Tight Supply and Severe Weather Conditions may further Spike Malaysian Glycerine Prices

Tight Supply and Severe Weather Conditions may further Spike Malaysian Glycerine Prices

  • 05-Jan-2022 2:40 PM
  • Journalist: Timothy Greene

Clouds of uncertainty have rolled over on the tightly available Malaysian glycerine, in major turn of events Malaysian Crude palm Oil (CPO) futures on Bursa Malaysia Derivatives exchange gained more than 3%. Sharp increase has come in the backdrop of unrelenting weather conditions across Malaysia where heavy rains run riots and sent waves of speculations around palm oil production.

CPO production shortage has a direct bearing on the prices of Glycerine as vindicated by the production disruptions across 2021. A rise in Crude palm Oil prices is likely to put upward pressure on downstream Glycerine which enjoyed a productive 2021 on the back of strong global demand and tight supply throughout the year.

Southern Peninsular Palm Oil Millers Association stated that they have observed an 8.5% decline in Palm oil production in December on monthly basis. This production dip is likely to snowballed into a bullish change in Glycerine prices.

There were speculations during Q4 that prices of Glycerine may soften in Q1 2022 contract negotiations as the Omicron threat induced conservative approach among buyers, however such speculations have been cleared off as the Crude palm Oil production dropped in December.

As per ChemAnalyst, “Climbing Crude palm Oil prices are likely to further pressured downstream Glycerine, fatty alcohol and fatty acids prices. 2021 has been productive year for oleochemicals amid demand recovery after a slump of 2020. There have been no signs of change in early 2022 as Q1 2022 contracts for key oleochemicals appears to be optimistic and buyers may have to wait for another quarter for any reprieve in prices. Economies are still assessing the impact of Omicron on key commodities meanwhile market outlook for oleochemicals is unlikely to change in the short term.”

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