Tallow prices remain under pressure

12 November 2015

Tallow prices are currently trading close to a six-year low. The latest edition of MLA’s monthly co-product report indicated tallow (2% FFA) averaged $605/tonne ex-works in October – steady on the previous month but $27/tonne behind last year’s already deflated value.

Tallow prices, correlated with other commodity oils, have remained subdued with both crude oil and palm oil tracking close to levels not seen since the Global Financial Crisis.

The return of Singapore, as a major market for Australian tallow, has not supported prices. Tallow shipments to Singapore declined almost ten-fold in October last year, compared to earlier months, with the temporary closure of a renewable fuel processing facility. However, exports to Singapore during the 2015 September quarter demonstrated a strong recovery, increasing almost three-fold year-on-year to just over 90,000 tonnes – 73% of total Australian exports and a trade worth A$69 million (ABS).

Smaller markets for Australian tallow have been unable to compete with the growth of Singapore. September quarter exports to China and Taiwan were 8,506 tonnes and 8,150 tonnes, respectively, back 62% and 39% year-on-year. A sporadic tallow shipment to Nigeria, of 10,200 tonnes in September, saw that export market return after an 11-month absence.

Tallow exports have tracked higher over the past two years, sustained by continued high Australian cattle slaughter. However, given cattle slaughter has started to slow and is expected to continue to contract, Australian tallow supply and exports will likely follow suit.

Click here for the October edition of the MLA Co-product market report, which contains price information and market trends for tallow and other co-products.

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