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Brazilian tallow prices rose further in the week to Thursday, February 20, mainly supported by stronger exports. Suppliers kept their offers at higher levels despite unexpected changes in the country’s biodiesel mandate.
The price reference for exported Brazilian tallow with a maximum of 15% free fatty acids (FFA), FOB Santos, was assessed at $1,050-1,080 per tonne in the week, up by $20 per tonne week on week.
Market participants said they heard trades at as high as $1,100 per tonne, while US buyers confirmed a growing demand for Brazilian tallow for March and April deliveries.
FOB Santos tallow remained competitive compared to rising US domestic animal fat prices. The price for tallow, max 20% FFA, delivered US Gulf was assessed at 55 cents per lb ($1,210 per tonne) on Wednesday, February 19.
In the domestic market, the bleachable fancy tallow (BFT), max 5% free fatty acids (FFA) CIF São Paulo, inclusive of 12% tax — a main reference for the local biodiesel industry — was assessed at 6.20-6.30 Reais ($1.08-1.10) per kg, up by 0.05 Reais per kg from a week earlier.
Strong exports were the main driver of higher prices in the domestic market, even after the Brazilian government halted on Tuesday, February 18 the increase to 15% (B15) of the minimum blend of biodiesel in diesel required by law, effective on March 1.
The current 14% biodiesel blend (B14) will remain in force in an attempt to control food price increases, the government said. Some domestic feedstock buyers were caught by surprise by the decision.
Biodiesel plants had been demanding higher volumes of feedstocks to prepare for the B15 and anticipate an increase in biodiesel capacity production. Tallow made up 8% of the feedstocks used in Brazil’s biodiesel in 2024.
“Producers have high stocks and were counting on selling higher volumes of biodiesel as early as March,” a source told Fastmarkets.
A trader said that some biodiesel producers stepped back from earlier bids for BFT max 5% FFA right after the halt in the B15.
But tallow suppliers kept their offers as high as 6.60 Reais per kg in the week to Thursday amid stronger exports and short supply. Market participants expected a slight drop in domestic prices for the next few days.
Meanwhile, the BFT max 3.5% FFA, CIF São Paulo, inclusive of 12% tax — the main reference for the hygiene industry — was assessed at 6.30-6.50 Reais ($1.10-1.14) per kg on Thursday, up by 0.10 Reais per kg week on week.