US tallow prices steady on changing biodiesel feedstocks

11 April 2013 20:43  [Source: ICIS news]

HOUSTON (ICIS)--US tallow and other grease prices are steadier than expected in April because of changing feedstock choices available for multifeedstock biodiesel production, grease traders, fatty acid market players and biofuel sources said on Thursday.

US tallow-based fatty acid producers typically use bleachable fancy tallow (BFT) as feedstock.

BFT is priced today at 43.50 cents/lb ($959/tonne,  €738/tonne) in the Chicago cash market, and is holding steady at that price in April.  

BFT prices rose about 1 cent/lb between February and March, but the rise was significantly less than many fatty acid market players expected.

Fatty acid producers and grease traders had expected the price of BFT to soar into the high 40s or even the 50s cents/lb in the second quarter because of its use as a feedstock in US biodiesel production.

The BFT price in Chicago at the same time last year was at about 45 cents/lb, pushed up from the high 30s by heavy purchases from the biodiesel side, sources said.

Traders commented that yellow grease and the more premium grade choice white grease prices are about at parity with the BFT levels.

“Fatty acid demand is good right now and the biodiesel plants are up and running, so why is grease not higher?” one US fatty acid market participant said.

At least part of the answer appears to be coming from an emerging feedstock source generated from corn-based ethanol production: distiller dried grains (DDGs) pressed to make corn oil.

“The industry number on corn oil production from DDGs is about 2.5bn-3.0bn/year at this time,” one ethanol supplier said.

The source pointed out that ethanol production from corn generally yields, on a per bushel basis, about one-third ethanol, one-third DDGs, and one-third carbon dioxide.

Corn oil can be obtained by pressing the DDGs to release the oil, with the remaining fibre and protein component moving into the traditional DDG animal feed end-use market, the source explained.

Fatty acids are produced by splitting oils or fats, generating the fatty acid and a glycerine co-product.

The fat or oil feedstock can be any vegetable oil – in the US, usually soybean oil; in Europe, typically rapeseed oil – tallow fats, yellow grease and some other greases.

($1 = €0.77)

By: Judith Taylor
+1 713 525 2653

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