US tallow prices keep rising on snug supply

22 April 2011 20:52  [Source: ICIS news]

HOUSTON (ICIS)--US bleachable fancy tallow (BFT) prices in the Chicago cash markets maintained its recent rise into the 50 cents/lb area, supported by snug supply, grease traders said on Friday.

BFT cash market prices in Chicago finished the week at 52 cents/lb ($1,146/tonne, €791/tonne).

Tallow prices in Chicago were at 49.50 cents/lb late March/early April, rising to the 52 cent/lb level about mid-month.

At the same time last year, BFT prices were at 33.50 cents/lb in the Chicago market, according to the cash market records.

Traders said the rise of more than 18 cents year on year was due to grease suppliers holding back material from the commercial market in order to keep volumes on hand to meet expected biodiesel production.

However, most biodiesel production in 2011 has been soy-based from midwestern US plants that are integrated to soybean crush, sources said.

Multi-feedstock units that would tend to utilise greases such as tallow, yellow grease or used vegetable oil are not widely operational at this time, according to traders.

One reason for the slower uptake in multi-feedstock biodiesel production was an ongoing credit issue, whereby lenders continued to be hesitant in offering credit to the biodiesel market owing to the industry's troubles since the recesssion began.

Grease buyers seeking to secure material for biodiesel production would typically be interested in forward positions for a three-month period; consequently most would require a credit stance for purchasing.

As a key feedstock for the production of tallow-based fatty acids as well as biodiesel production, BFT has become a benchmark in the US grease market.

($1 = €0.69)

By: Judith Taylor
+1 713 525 2653

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