Brazil’s beef tallow use in biodiesel grows 30% in September

Brazil’s domestic biodiesel production based on beef tallow grew from August to September, according to data published by Brazil’s National Petroleum Agency, or ANP, on Oct. 21.

According to the data released, beef tallow accounted for 76,497 cu m of the total biodiesel produced during the month of September, an increase of 30% compared to August, when the total share of tallow used for biodiesel was 58,685 cu m.

The increase reflects how the beef tallow market has been adapting after the US announcement of 50% tariffs on imports.

In August, for instance, exports totaled 65,000 mt, according to data published by Brazil’s Foreign Trade Secretariat. In September, numbers dropped to 28,000 mt, reflecting the new export landscape with the announced tariffs.

Therefore, all the volumes that were not exported became available for domestic consumption, and buyers started observing better margins for producing biodiesel using tallow, especially in a moment when soybean oil prices remain at record levels.

One source informed Platts that the spread between domestic tallow and soybean oil has been from Real 500-700/mt in favor of tallow.

Platts, part of S&P Global Commodity Insights, assessed Beef Tallow ex-works Mato Grosso at Real 5,890/mt Oct. 20.

Market participants expect this dynamic to continue, with tallow likely to keep stealing share in the biodiesel matrix from other feedstocks, especially soybean oil.

According to sources, the ongoing negotiations between Brazil and the US about the imposed tariffs will be an important signpost to watch. However, participants have said that while the negotiations do not advance, tallow will continue to interest biodiesel producers if the spread against the soybean oil remains competitive.

Biodiesel market

The biodiesel industry’s increased use of beef tallow was also fueled by the increase in the biofuel blend into diesel from 14% to 15%, which occurred in August.

Intensified by a period of tighter soybean oil crushing margins, the increase in the blend percentage helped raise raw material prices in the domestic market and narrowed the spread between mills’ production capacity and demand, according to market participants.

Platts assessed biodiesel DAP Paulinia for one-to-seven-day delivery at Real 6,518/cu m on Oct. 20, up 17% from Real 5,603/cu m on July 30, before the blend increase.

However, while the short-term market for the absorption of beef tallow is favorable, biodiesel industry representatives state that the volumes are insufficient to significantly affect the supply and demand flows or even the biodiesel price outlook.

“Tallow tends to reach the price equivalent to soybean oil over time, even with a marginal discount, especially since it is less readily available than the oilseed,” said a Brazilian biodiesel producer.

Tags: biofuel