Brazil's exports of beef tallow are forecast to keep rising this year to surpass 100,000 metric tonnes (t) on robust international demand, especially from the US.
North American traders and biofuel producers were most actively searching for commercial partnerships with animal rendering companies during last week's 2023 Rendering Convention of the Americas (Ream) — an event held in Cartagena de Indias, Colombia, that assembled agents from the animal tallow and flour industry and was organized by Brazilian renderers' association ABRA and agri-food industry business platform AgriGlobal Market.
Demand from abroad "is really here to stay" beyond the occasional window of opportunity, ABRA's president Decio Coutinho told Argus.
Coutinho pointed out that the foreign market's appetite is linked to the implementation of biodiesel programs in several countries, such as the US Environment Protection Agency (EPA) rule, updated in June, covering successive increases in the volume of renewable fuel blended with oil products in 2023-2025 under the Renewable Fuel Standard (RFS).
At the same time, European countries are looking for tallow to replace gas used for heating, with supply currently restricted by sanctions on Russia. "That is a short-term window of opportunity," Coutinho said.
Brazil has exported around 80,000t of beef tallow since January, with around 21,000t dispatched in July alone, according to trade ministry data. Around 40,000t was sent abroad in the same seven-month period in 2022.
Exports through July are nearing the 81,000t shipped throughout 2022. Market participants are expecting exports to surpass 100,000t this year, although uncertainty exists around the effects of seasonal factors.
Brazil exports tallow to 58 countries, with the US, China, Malaysia, Egypt and South Africa as the leading destinations. Brazil — historically a net importer of tallow — has grown into a net exporter role since the end of 2022, a shift that follows the animal rendering sector's pivot to producing animal-based fat instead of flour.
Growth in demand for tallow in the US is the result of a counter-trend. The country moved from being a net exporter, a position held in 2012, to a net importer in 2022. It imported 250,000t of beef tallow and exported 55,000t of the product in January-May, according to US Department of Agriculture's (USDA) data.
The increase in volumes destined to the US reflects growing demand in the biodiesel and renewable diesel markets. Growth in the sector has been encouraged by government programs, such as the federal Renewable Fuel standard (RFS) program, California's low carbon emissions (LCFS) and President Joe Biden administration's Inflation Reduction Act (IRA), which rewards a shift to renewables.
The changing scenario was one of the driving forces behind business talks at last week's rendering event, where the spotlight was put on large producers of animal fat from Latin America. "Meat exporters Argentina, Uruguay, Paraguay and Brazil have a lot of room to grow or to continue exporting a significant percentage of what is produced [from rendering industries]," Lucas Cypriano, technical director of the World Renderers Organization (WRO), a group representing global rendering associations, said last week.
Brazil produces 1.3mn-1.5mn t/yr of beef tallow. It exports around 6pc of domestic supply and uses around 35pc of that as raw material for biodiesel. The rest is divided between the hygiene and cleaning sectors, the animal feed industry and the pet food sector. "We have a very organized and balanced distribution, with all capacity to fully serve the domestic market," Coutinho said. As for exports, "we are sure that the very expertise that the sector has acquired in exporting will give us high numbers very quickly."
Cypriano defends greater integration between companies in Latin America. "Why send it to Singapore, Thailand, if our own neighbors need it?," he questions. "We have a logistical challenge, but we have alot of room togrow in the region's internal trade." That sentiment is aligned with ABRA's vision.
At the end of last week's rendering convention, the associations and organizing companies collected feedback from market participants and took the decision to continue annual events through 2026. In line with the goal for greater regional integration, future events will take place in Medellin, Colombia, in 2024; Chile in 2025; and Mexico, in 2026.
