Brazilian tallow export growth likely to last

Market: Biofuels
10/08/23

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.

By Conrado Mazzoni

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

04/10/24

Global bio-bunker demand to pick up, US left behind

New York, 4 October (Argus) — Tightening vessel carbon intensity indicator (CII) scores and looming 2025 FuelEU marine regulation are expected to raise biodiesel demand for bunkering, but non-competitive US prices should continue to weigh down on US bio-bunker demand. Houston B30, a blend of used cooking methyl ester (Ucome) and very low-sulphur fuel oil (VLSFO), in September averaged at $821/t, a $45/t premium to B30 sold in Amsterdam-Rotterdam-Antwerp, and a $55/t premium to B24 sold in the west Mediterranean hub of Gibraltar and Algeciras (see chart) . Houston B30 was also priced at $115/t and $61/t premium to B24 sold in Singapore and Guangzhou, China, respectively. The price premium would continue to incentivize ship owners with global, ocean-going fleets to pick Asia first for their biodiesel bunker purchases, followed by northwest Europe and western Mediterranean. US demand for biodiesel for bunkering would continue to stagnate unless the US passes a legislation allowing Renewable Identification Number (RIN) credit under the US Renewable Fuel Standard (RFS) program be used by ocean-going vessels fueling with biodiesel in US ports. The legislation could level US' price playing field. Two bipartisan bills were put forward in support of renewable fuel for ocean-going vessels, one in the US Senate this year and one in the US House of Representatives last year, but they are currently dead in the water. Conventional marine fuels are priced cheaper than biodiesel and green varieties of LNG, ammonia, methanol, and hydrogen. But tightening International Maritime Organization (IMO) and EU regulations are forcing the hand of ship operators to consider green fuels to avoid hefty penalties and having their vessels suspended from trading. Ship owners whose vessels are outfitted with LNG-burning engines, are poised to have the lowest marine fuel expense heading into 2025, as fossil LNG is currently ship owners' cheapest low-carbon fuel option. But retrofitting a vessel to burn LNG could range from $5-$35mn, depending on the size of the vessel. Biodiesel, a plug-and-play fuel that does not require a vessel retrofit, is the second cheapest low-carbon fuel option after fossil LNG. IMO's CII regulation came into force in January 2023 and requires vessels over 5,000 gt to report their carbon intensity, which is then scored from A to E. The scoring levels are lowered yearly by about 2pc, so even a vessel with no change in CII could drop from C to D in one year. If a vessel receives a D score three years in a row or E score in the previous year, the vessel owner must submit a corrective actions plan. E scoring vessels could be prohibited from entering some ports' territorial waters, but this penalty is yet to be imposed on any E vessels. In 2023, the IMO reported that 40pc of the vessels scored A or B, 27pc scored C, 19pc scored D or E and 14pc were unresponsive. The EU's FuelEU maritime regulation will require ship operators traveling in, out and within EU territorial waters to gradually reduce their greenhouse gas (GHG) intensity on a lifecycle basis, starting with a 2pc reduction in 2025, 6pc in 2030 and so on until getting to an 80pc drop, compared with 2020 base year levels. It imposes a penalty of €2,400/t ($2,629/t) of VLSFO equivalent energy for vessel fleets exceeding its GHG limits. By Stefka Wechsler Biodiesel blends* Houston less global ports $/t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more

News

US light vehicle sales surged in September

03/10/24

News

03/10/24

US light vehicle sales surged in September

Houston, 3 October (Argus) — Domestic sales of light vehicles rebounded in September, increasing to a seasonally adjusted rate of 15.8mn on the strength of greater truck purchases. Sales of light vehicles — trucks and cars — rose from a seasonally adjusted annual of rate 15.3mn in August, the Bureau of Economic Analysis reported today. Sales have whipsawed the previous four months, but September's rate largely was in line with the 15.7mn unit rate in September 2023. The US Federal Reserve last month cut its target rate for the first time since 2020, bringing it down by 50 basis points from its 23-year highs as inflation has been easing. Lower inflation and Fed easing, which ripples across credit markets, make it more affordable for people to purchase new vehicles. Fed policymakers have penciled in another 150 basis points worth of cuts through 2025, as they hope to head off any weakening in the labor market that could scuttle the wider economy. Higher overall sentiment about the US economy, fueled by a robust 3pc growth in gross domestic product (GDP) in the second quarter, healthy labor conditions and consumer spending also have encouraged consumers to spend. Sequentially, light truck sales increased by 3.1pc to a 12.8mn unit rate in September, while sales of cars rose by 4.4pc to a 3mn unit rate in the same time period. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

California adds oilseed limits as vote nears: Update

02/10/24

News

02/10/24

California adds oilseed limits as vote nears: Update

Updates throughout with more detail on revisions. Houston, 2 October (Argus) — California regulators advanced stricter limits on crop-based biofuels as revisions to a key North American low-carbon incentive program drew closer to a vote. The California Air Resources Board (CARB) late yesterday added sunflower oil — a feedstock with no current approved users or previous indicated use in the program — to restrictions first proposed in August on canola and soybean oil feedstocks for biomass-based diesel. The new language maintained a proposal to make the program's annual targets 9pc tougher in 2025 and to achieve by 2030 a 30pc reduction from 2010 transportation fuel carbon intensity levels. Board decisions that could come as early as 8 November may reconfigure the flow of low-carbon fuels across North America. The state credits anchor a bouquet of incentives that have driven the rapid buildout of renewable diesel capacity and dairy biogas capture systems far beyond California's borders, and inspired similar, but separate, programs along the US west coast and in Canada. CARB staff's latest proposals, published a little before midnight ET on 1 October, offer comparatively minor adjustments to the shock August revisions that spurred a nearly $20 after-hours rally in LCFS prompt prices. Prompt credits early in Wednesday's session traded higher by $3 than they closed the previous trading day before slipping back by midday. LCFS programs require yearly reductions in transportation fuel carbon intensity. Higher-carbon fuels that exceed these annual limits incur deficits that suppliers must offset with credits generated from the distribution to the market of approved, lower-carbon alternatives. California's program has helped spur a rush of new US renewable diesel production capacity, swamping west coast fuel markets and inundating the state's LCFS program with compliance credits. CARB reported more than 26mn metric tonnes of credits on hand by April this year — more than enough to satisfy all new deficits generated in 2023. Staff have sought through this year's rulemaking to restore incentives to more deeply decarbonize state transportation than thought possible during revisions last made in 2019. Participants have generally supported tougher targets, with some fuel suppliers warning about potential price increases and credit generators urging CARB to take a still more aggressive approach. But proposals to limit credit generation to only 20pc of the volume of fuel a supplier made from canola, soybean and now sunflower has found little public support. Environmental opponents have argued that the CARB proposals fall short of what is necessary to add protections against cropland expansion and fuel competition with food supply. Agribusiness and some fuel producers have warned the concept, proposed in August, ran counter to the premise of a neutral, carbon-focused program and against staff's own view last spring. The proposal exceeded what CARB could do without beginning a new rulemaking, some argued. CARB yesterday proposed a grace period for facilities already using the feedstocks to continue generating credits while seeking alternatives. Facilities certified to use those feedstocks before changes are formally adopted could continue using those sources until 2028, compared to a 2026 cut off proposed in August. No facilities currently supplying California have certified sunflower feedstock, and it was not clear that any were planned. "We're not aware of any proposed pathway or lifecycle analysis for sunflower oil, so that addition is just baffling," said Cory-Ann Wind, Clean Fuels Alliance America director of state regulatory affairs. "Clearly not based in science." The latest revisions include a change to how staff communicate a new, proposed automatic adjustment mechanism (AAM). The mechanism would automatically advance to tougher, future targets when credits exceed deficits by a certain amount. Supporters consider this a more responsive approach to market conditions than the years of rulemaking effort already underway. Opponents argue such a mechanism cedes important authority and responsibility from the board. Staff proposed quarterly, rather than annual, updates on whether conditions would trigger an adjustment, and to use conditions during the most recent four quarters, rather than by calendar year. Obligations and targets would continue to work on a calendar-year basis. CARB staff clarified that verifying electric vehicle charging credits would not require site visits to the thousands of charging stations eligible to participate in the program. Staff also clarified how long dairy or swine biogas harvesting projects could continue to generate credits if built this decade, with a proposed reduction in credit periods only applying to projects certified after the new rules were adopted. California formally began this rulemaking process in early January after publishing draft proposals in late December. Regulators initially proposed adjusting 2025 targets lower by 5pc for 2025 — a one-time decrease called a stepdown — to work toward a 30pc reduction target for 2030. CARB set its sights on 21 March for adoption. But staff pulled that proposal in February as hundreds of comments in response poured in. Updated language released on 12 August proposed a steeper stepdown for 2025 of 9pc while keeping the 30pc target for 2030. Public comment on yesterday's publication will continue to 16 October. By Elliott Blackburn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

US dockworkers, shippers strike positions entrenched

02/10/24

News

02/10/24

US dockworkers, shippers strike positions entrenched

New York, 2 October (Argus) — The US dockworker strike gripping east coast and Gulf coast container terminals may not be short-lived given the wide gap between union demands and the offer from an alliance of containership owners, terminal operators and port associations. The United States Maritime Alliance (USMX) said its latest proposal for a 50pc wage increase, made on 30 September just before the strike started, "exceeds every other recent union settlement while addressing inflation". But the International Longshoremen's Association (ILA) rebuked USMX's characterization of the offer late Tuesday, saying it fails to address the many years it takes for the port workers it represents to realize the higher wages, and factors like workers being on unpaid on-call status. The last-minute timing of the 50pc wage increase offer itself undermines the USMX's position as good faith negotiators, ILA said. "[The] USMX's claim that they are ready to bargain rings hollow when they waited until the eve of the potential strike to present this offer," the ILA said. "The last offer from [the] USMX was back in February 2023." Dockworkers started to picket container terminals in New England, New York, New Jersey, Houston, Texas, New Orleans, Louisiana, and other locations on 1 October . Containership loading and unloading has come to a halt at those terminals, while no trucks where queued at unmanned loading checkpoints. The union has pointed to a perceived unfairness in record profits reported by shipping companies since the Covid-19 pandemic not being shared with ILA members who were "keeping ports open and the economy moving" during that time. The union is also sticking to demands for no new automation technology at US ports that would replace workers, describing this position as "non-negotiable", and the right to 100pc of the "container royalties" funds, a type of welfare paid out by employers to protect US longshoremen from the loss of work brought on by the containerization of cargo. No fed intervention expected US president Joe Biden continued to indicate the federal government would not intervene in the strike, saying collective bargaining between the ILA and the USMX is the best way for workers to achieve their goals. In a statement this week Biden also pointed out that the USMX "represents a group of foreign-owned [ocean] carriers" and insisted that they should "present a fair offer" to the ILA. "It is time for [the] USMX to negotiate a fair contract with the longshoremen that reflects the substantial contribution they've been making to our economic comeback," Biden said. Vice-president Kamala Harris, who is running to replace Biden, doubled-down on that position today. "This strike is about fairness," Harris said in a statement. "Foreign-owned shipping companies have made record profits and executive compensation has grown. The Longshoremen, who play a vital role transporting essential goods across America, deserve a fair share of these record profits." Few commodities curtailed for now Ports and the companies that rely on them have been anticipating the strike for many weeks . Movements of dry bulk cargo, such as coal and grains, are expected to be less affected by the work stoppage, though there could be side effects from the congestion of other products being rerouted to ports not affected by the strike. Movement of crude, refined products and many petrochemicals are not expected to be interrupted, but some polymers that are moved by container, including polyvinyl chloride (PVC), polyethylene (PE), and polypropylene (PP), could be disrupted. A segment of US steel imports could also be disrupted by the strike, as about 9pc of those imports come in via containers , according to data from Global Trade Tracker. A prolonged strike could begin to curtail some downstream manufacturing of equipment that requires parts that move by containers. By Ross Griffith Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

EU commission pushes for 12-month deforestation delay

02/10/24

News

02/10/24

EU commission pushes for 12-month deforestation delay

Brussels, 2 October (Argus) — The European Commission has proposed an extra 12 months' "phasing-in time" to implement the bloc's EU deforestation regulation (EUDR). The commission also published the outlines of the EUDR methodology to classify countries as low, standard or high-risk. It said a large majority of countries worldwide will be classified as "low risk". The commission said that three months ahead of the intended implementation at the end of this year, "several global partners" have repeatedly expressed concerns about preparedness and that European stakeholder preparation is "also uneven". It added that the delay in "no way puts into question the objectives or the substance of the law". German agriculture minister Cem Ozdemir last month called for the commission to "urgently" postpone the EUDR's implementation by six months . The commission can "create all the necessary conditions on its own" for a delay, without renegotiating the EUDR, he said. Parliament's largest centre-right EPP group has also pushed to delay the regulation. Officials published "additional" guidance documents and a "stronger" international co-operation framework for global stakeholders, EU states and third countries. The change requires approval from EU states and European Parliament to make the EUDR applicable from 30 December 2025 for large companies. The date would be pushed back to 30 June 2026 for small firms. A group of major firms such as Ferrero, Mars Wrigley, Mondelez International and Nestle called for no reopening of the EUDR's "substance". The group, joined by several campaign organisations including Fairtrade International, said renegotiating aspects of the EUDR would only increase uncertainty and jeopardise the investments made for application. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more