Global Oleic Acid Prices Surge Amidst Multiple Market Factors in January 2024

In the opening month of 2024, the global oleic acid market has witnessed a substantial increase in prices, impacting both major exporting and importing regions. Several interconnected factors have contributed to this surge in oleic acid prices, with heightened manufacturing activities and raw material price fluctuations taking center stage.

As the first quarter of 2024 commenced, major players in oleic acid production nations ramped up manufacturing activities in response to bulk orders and increased offtakes from both domestic and international markets. This surge was driven by the need to replenish inventories with fresh stock of oleic acid, indicating robust demand in the industry.

One of the primary factors influencing the oleic acid market is the escalated prices of raw materials, particularly palm oil, in producing nations. Starting from January 4th, the domestic palm oil market witnessed an upward trend. The rise was attributed to anticipated decreases in Malaysian palm oil inventory data, stimulating the external Malaysian palm oil futures market. Analysts project continued bullish sentiment in the palm oil market, supported by rigid demand for terminal oils and fats, further impacting oleic acid prices.

Furthermore, the Malaysian Palm Oil Board (MPOB) announced that the export tax rate for Malaysian crude palm oil in February 2024 would remain unchanged at 8%. Simultaneously, the reference price for palm oil used to calculate tariffs was increased. This announcement contributed to the upward trajectory of palm oil prices, as well as oleic acid prices.

In addition to palm oil, the soybean oil market experienced fluctuations, influenced by South American soybean weather changes. While the market showed oscillating gains, the overall increase was not as significant as observed in palm oil. The approaching Spring Festival led to soybean oil factories gradually shutting down for maintenance, resulting in supply tightening and supporting terminal rigid demand.

Geopolitical tensions, notably in the Red Sea region, emerged as another crucial factor impacting oleic acid prices, particularly in the European market. Disruptions in key maritime routes, including the Suez Canal, led to a surge in freight charges, causing challenges such as delivery delays, changes in shipping routes, contingency surcharges, rising freight costs, premium adjustments, disruptions in the supply chain, and fluctuations in demand.

The global market, inclusive of oleic acid, is grappling with the repercussions of geopolitical disturbances in the Red Sea and the Suez Canal. Freight prices are expected to witness a significant jump, and longer transit times around Africa are causing delays in product deliveries, including oleic acid.

Moreover, the devaluation of the Euro currency in January has added slight inflationary pressure, leading to constrained market sentiment. The depreciated Euro has consequences for pricing dynamics, contributing an extra layer of intricacy to market conditions.

In conclusion, the increased prices of oleic acid in January 2024 can be attributed to a confluence of factors, including heightened manufacturing activities, raw material price fluctuations, geopolitical tensions impacting freight charges, and currency devaluation. Industry stakeholders are closely monitoring these developments as they navigate the complex landscape of the global oleic acid market.