US oleochems cautious on soybean outlook

09 May 2008 22:30  [Source: ICIS news]

HOUSTON (ICIS news)--US oleochemicals participants in fatty alcohols and glycerine are growing cautious about prices in these markets due to uncertainties in the soybean oil outlook, traders said on Friday.

 

“It’s crazy right now – very complex,” one glycerine and alcohol trader said.

 

Another trader said strategies for securing positions on future months were becoming increasingly difficult because of the uncertainties in the soybean and vegoil commodity markets.

 

Such comments were in part fostered by the release of US Department of Agriculture (USDA) oilseeds data on world markets and trade.

 

According to the USDA, US soybean production this year is to climb 20% over 2007 due to increased acreage.

 

However, the 2007-08 carry-over was described by USDA as being well below normal.

 

The lower carry-over amount was expected to significantly reduce the impact that the larger 2008 crop would have on the overall US supply condition, sources said.

 

The department said the carry-over was down to 4m tonnes, offering scant cushion against a US production shortfall or foreign supply shocks.

 

According to the USDA, soybean stock harvested for supply and distribution in 2007-08 was about 70,358m tonnes. This compared to a 2006-07 stock of about 86,770m tonnes of production.

 

The US is the world’s largest producer of soybeans, followed by Brazil, Argentina, and China.   The US also is the largest producer of soybean oil, with Argentina second, followed by China and Brazil.

 

A number of oleochemical products rely upon soybean oil as feedstock, including fatty alcohols and fatty acids, thereby also affecting co-product glycerine.

 

US fatty alcohol prices shot up over 10 cents/lb ($220/tonne) in some varieties between December 2007 and March this year.

 

One example was short-chain C8-10 natural alcohols, where contract prices were assessed at an average of 127.50 cents/lb in January this year by global chemical market intelligence service ICIS pricing, with average assessments hitting 147.50 cents/lb by April.

 

US refined vegetable glycerine contract averages spiked about 20 cents/lb during the same period, moving from a 70.5 cent/lb ICIS average in December to a $1/lb average by April.

 

Kosher and vegetable glycerine supply shortages forced the price hikes, sources said.

 

Those shortages in part were caused by a collapse in soybean oil-based biodiesel production due to high feedstock bean oil costs.  Escalating prices in the closely related Asian export market, fostered by swiftly rising soybean oil prices and other oil costs, also played a role.

 

US fatty alcohol and glycerine producers include Procter & Gamble and Cognis Oleochemicals, among a few others.

 

($1 = €.65)

 

To discuss issues facing the chemical industry go to ICIS connect

By: Judith Taylor
+1 713 525 2653

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly