For biodiesel and renewable diesel manufacturers, tallow isn’t just an ingredient. It’s a crucial feedstock driving production and profitability. And with the biofuel industry expanding at unprecedented rates, understanding the dynamics of tallow pricing has become essential.
Here’s why tallow pricing is dictating competition in global biofuels, the factors influencing these shifts and how accurate price tracking tools such as Fastmarkets are transforming how businesses trade.
Tallow demand is booming, but supply is relatively flat
The demand for tallow is surging with the global push for renewable energy and more significant blending mandates. But here’s the catch—tallow supply can’t expand at the same pace.
Key drivers include:
US renewable diesel capacity increase
The United States’ renewable diesel capacity has skyrocketed by a staggering 538% since January 2021. Yet, the domestic market can’t keep up with the demand for low carbon intensity (low CI) feedstocks like tallow. The California Low Carbon Fuel Standard (LCFS) incentivizes fuels produced from low CI feedstocks, forcing US buyers to widen their net.
Global buyers look to Brazil
Brazil has become a pivotal player in sourcing additional feedstocks, particularly tallow. By October 2024, Brazil exported 282,791 tonnes, with 94% going to the United States. This dramatic export growth—from just 22,453 tonnes in 2021—highlights how Brazil is fulfilling a market gap the US can’t meet alone.
While Brazil is exporting significant volumes, its own local market competes heavily for tallow. Local biodiesel producers ramp up purchasing during periods of high soybean oil prices. Expanding biodiesel mandates and other industries, like oleochemical producers, prefer tallow’s fatty acid profile, further straining supply. Competition for tallow has intensified globally—and locally.
