US tallow prices fall on lower demand from biodiesel – traders

29 July 2011 22:10  [Source: ICIS news]

HOUSTON (ICIS)--Prices for US tallow are falling because use in the biodiesel industry is slowing down, grease traders said on Friday.

Benchmark bleachable fancy tallow (BFT) prices in the Chicago cash market hovered around 52.50 cents/lb ($1,157/tonne, €810/tonne) in early afternoon trading. This price was down from the Thursday close of 53.00 cents/lb.

The 53 cent/lb mark this week on BFT showed a 2 cent/lb decline from the same day the previous week.

June BFT prices averaged about 55 cents/lb.

Biodiesel producers in the US and in Europe are now sourcing fourth-quarter feedstock requirements, choosing more soybean oil and canola oil, traders said.

The decreased preference for tallow is now opening the first crack in a tight fats and grease supply condition that has prevailed for some months.

“They are all under pressure right now because biodiesel demand is decreasing,” one trader said.

Multi-feed biodiesel producers tend to use less tallow feedstock as autumn approaches because colder temperatures can bring about clouding and flow problems with the fuel.

Producers can use a variety of fats or oils to make the biofuel. They typically seek to use soybean oil to make vegetable-based biodiesel, but move to fats such as tallow or poultry fat depending upon cost, availability and production methods.

Any shift in the purchasing habits of industrial users of tallow has an effect on end-use markets because  90% goes to food uses, leaving 10% for industrial buyers, market sources said.

Industrial buyers of tallow and other fats and greases include US fatty acid and glycerine producers such as Vantage Oleochemicals, Emery Oleochemicals and VVF.

($1 = €0.70)

By: Judith Taylor
+1 713 525 2653

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