Operating a business dependent on fats and oils as a feedstock and primary cost item has been challenging in 2020 - particularly if palm kernel oil (PKO) is your exposure. PKO pricing has been more volatile than laurics amid production and demand uncertainties. There is not much uncertainty about coconut oil (CNO) production in 2020 - it is poor! While some experts are discussing 2021 as a much better year, it may still not be very good relative to PKO supply. Two factors playing heavily in the CNO vs PKO market value and usage drama are the PKO RSPO mass balance premiums and the Light Cut (C810) values. We will be watching both variables in addition to the base price comparisons.
Most oleochemical producers are using as much PKO as they can. For the balance of CY2020, CNO production will likely remain as poor as this year to date. It is integral to conduct a careful analysis of your sensitivity to the spread and to the attributes of each product you produce from each feedstock.
P&G Chemicals remains committed to ensuring it sustains its long history of securing sustainable and competitive feedstocks, converting them into products that enable our customers to win in their markets.