US grease prices rising on demand – traders

02 November 2010 20:17  [Source: ICIS news]

HOUSTON (ICIS)--US yellow grease prices are rising on demand from buyers using it as a substitute for tallow, traders said on Tuesday.

“Tallow is as tight as it can be. There is little yield on the cattle and a lot of demand, ” one trader said.

Yellow grease prices hit 35.25 cents/lb ($777/tonne, €560/tonne) on Tuesday in active trading, with one supplier expecting even higher prices by next week, according to traders. 

Bleachable fancy tallow was priced at 32-33 cents/lb two weeks ago, but moving higher on the rising yellow grease prices, sources said.

Bleachable fancy tallow cash prices in Chicago were tracking 35 cents/lb in early Tuesday trading, according to the Chicago Mercantile Exchange.

US tallow and yellow grease shipments were said to be routinely destined for South America, but exporters said there was some concern that supply would be sufficient to demand in November and December.

Traders said the grease markets have tightened to the point that yellow grease and tallow prices are moving to parity because buyers in need of tallow, but unable to find it, were turning to yellow grease.

A combination of lower fat content on cattle going into the US renderer markets and increased demand from Europe, where the rapeseed crop was said to be poor, were the underlying reasons for higher demand in the greases, according to traders.

In the US and Europe, tallow is used as a feedstock for tallow-based fatty acids and glycerine.

Yellow grease is made from used vegetable oils and is typically a lower priced commodity than tallow.

US grease suppliers and traders include Cargill and Darling International.

($1 = €0.72)

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By: Judith Taylor
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