06 March 2012 12:51 [Source: ICIS news]
KUALA LUMPUR (ICIS)--Unpredictable lauric oil prices look set to continue, with palm kernel oil prices increasingly likely to demonstrate volatility and affect the oleochemical market in the short term, a vice president at BASF said on Tuesday.
Harald Sauthoff, vice president for the global procurement of natural oils and oleochemicals at the chemical major, said it was likely an increased push by the industry towards the use of sustainably certified palm oil products would create a “two-tier market structure”.
An increased need for palm oil plantations to meet sustainability criteria relating to social, environmental and economic good practice will impact on liquidity, resulting in volatile pricing patterns for the commodity, Sauthoff said.
“With the market in the midst of a transformation, a two-tier structure will likely exist until certified oil is the new norm and markets go back to a one-tier structure,” he added.
Speaking at the Palm and Lauric Oils Conference and Exhibition Price Outlook 2012 in Kuala Lumpur, Malaysia, Sauthoff also highlighted the increased influence of macroeconomic sentiment on the volatility of agricultural commodity markets.
Since the onset of the 2008 economic crisis, the correlation between lauric oil prices and the Dow Jones Index has increased significantly.
Lauric oils traded between $1,000–2,350/tonne CIF (cost, insurance and freight) Rotterdam during 2011. With even greater unpredictability in the market than ever before, Sauthoff predicted a wide spread to continue throughout 2012.
($1 = €0.76)
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