Grease prices steady US fatty acid feedstocks

28 January 2010 20:45  [Source: ICIS news]

Grease steadies feedstock pricesHOUSTON (ICIS news)--Higher yellow grease values are expected to bring steadier fatty acid feedstock bleachable fancy tallow (BFT) prices, traders said on Thursday.

US fatty acid sellers were jousting with grease prices, as low-grade yellow grease bid/offers moved higher, according to grease buyers.

Traders said yellow grease was trading at about 26.00-27.50 cents/lb ($573-606/tonne, €407-430) in Thursday’s Chicago cash market, and on offer to export buyers at $660-670/tonne during the morning in North America.

This price level on the low-grade grease put it at par with tallow-based fatty acid feedstock bleachable fancy tallow (BFT), which was priced at 27 cents/lb on Thursday, traders said.

Yellow grease going at, or close to, par with the BFT was considered a steadying factor for the fatty acid feedstock, according to large trading groups.

Steadier BFT prices would be a welcome trend for tallow-based fatty acid producers who have grappled with uncommon volatility in the fats/grease markets due to biodiesel use of these feedstocks.

BFT prices soared into the low-to-mid 30s cents/lb during the second half of 2009, as US biodiesel producers sought to mitigate crashing margins by going to multi-feedstock production using fats/greases wherever possible.

Caught in a price crunch between BFT price volatility and low co-product glycerine sales prices, US fatty acid producers - who often sustain margins largely on the co-product - have scrambled to handle the challenges without price increase initiatives.

However, one smaller producer has confirmed it announced a 1 February 5 cent/lb non-formula increase on its tallow-based fatty acids and tallow specialty derivatives. The supplier said it could no longer cope with higher production costs fostered by these market dynamics.

Other tallow-based fatty acid producers did not follow the February announcement. One major supplier said it anticipated the steadier BFT prices and would not seek to raise prices.

Stearic tallow fatty acid January prices for triple-pressed material were 51-53 cents/lb, according to global chemical market intelligence service ICIS pricing.

January co-product refined tallow glycerine contract prices were assessed at 28-45 cents/lb.

US tallow-based fatty acid producers include Emery Oleo, Procter & Gamble, Vantage, PMC and Dial Corporation, among others.

($1=€0.71)

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By: Judith Taylor
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