US beef tallow supply tightens on seasonal lull

19 November 2009 22:38  [Source: ICIS news]

HOUSTON (ICIS news)--A seasonal lull is tightening supplies of US beef tallow, driving up prices for the primary feedstock for US tallow fatty acids, traders said on Thursday.

Prices for bleachable fancy tallow (BFT) - the tallow grade used in fatty acid production - have hit 26.25 cents/lb ($579/tonne; €388/tonne), and tight supply could signal potentially higher prices for stearic and oleic fatty acids. 

“It’s turkey and ham season, and the holidays make a difference,” one tallow trader said.

US consumers typically turn to less beef products amid the holidays, choosing traditional favourites such poultry and ham instead.

Grease traders said the holidays take about four business days out of the beef rendering business, traders said.  

Tallow-based fatty acid producers use one-month, or two-month, BFT price averages as a core element in contracts.

September/October BFT prices fell into the high-20s cents/lb after hitting the mid-30s cents/lb in August.

Tallow and other fats are biofuel feedstock for multi-feedstock biodiesel plants.  As a result, biodiesel production squeezes grease supply in warm-weather months, when cold-flow issues do not arise.

The retreat of the biodiesel drain on tallow and other fats allowed the BFT prices to move down amid improved supply in September/October, traders said.

US fatty acid producers include Cognis, Procter & Gamble and Dial.

($1 = €0.67)

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By: Judith Taylor
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