High feedstock costs push US fatty acid prices up - sellers

21 December 2010 21:37  [Source: ICIS news]

HOUSTON (ICIS)--High feedstock bleachable fancy tallow (BFT) prices are plaguing the US fatty acid market by pushing prices higher, sellers said on Tuesday.

Grease and tallow traders said BFT was moving at 41 cents/lb ($904/tonne, €687/tonne) in physical trades on Tuesday, but mentioned that volumes were thin.

This cash market price matched the four-week November average of 41.05-41.10 cents/lb, depending upon producer, used as a core factor in contract formulas. 

The previous four-week average BFT factor was in the mid-30s cents/lb, sources said.

At least one fatty acid producer was considering adopting a different formula in its contracts in order to better reflect feedstock price volatility, a market player said. 

A tallow glycerine producer and fatty acid buyer said last week’s reinstatement and extension of the tax credit for US biodiesel was a concern because of the drain that biodiesel can put on the grease and fats market segment.

“Choice white tallow and poultry fats are their preferred feedstocks, but extra buying on those pushes up all the grease prices,” one market participant said. 

C18 Triple Pressed Stearic Acid (TPSA) prices in November were assessed at 52.50-55.50 cents/lb. Suppliers said this range was moving up about 3 cents/lb on both sides of the spread for December TPSA contracts.

All US tallow-based fatty acid producers use an average feedstock cost in contracts, with price protection offered on a 30-day basis only, in most situations.

According to market participants, 90% of US grease and fats go into food uses. The remaining 10% is available to industries such as fatty acid and biodiesel production.

US fatty acid producers include The Dial Corporation, Emery Oleochemical, Twin Rivers and Vantage Oleochemical.

($1 = €0.76)

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By: Judith Taylor
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