Mumbai, 15 Jun (Commoditiescontrol): The US biofuel industry is undergoing a significant transformation as Brazilian tallow increasingly replaces traditional feedstocks like soy oil. This shift has substantial implications for both the renewable fuel sector and soy oil demand.
Brazil's production of tallow, a type of waste fat derived primarily from cattle, has surged dramatically. In the first four months of 2024, US imports of Brazilian tallow increased by 377% compared to the same period in 2023. This sharp rise has established Brazil as the largest supplier of tallow to the US, accounting for nearly 40% of all tallow shipments.
US biofuel companies are turning to cheaper and more efficient raw materials like tallow and used cooking oil. These alternatives not only offer lower carbon emissions than soy oil but also benefit from favourable tax policies in states like California, where a significant portion of green diesel is consumed.
Starting next year, a new federal tax credit will further incentivize the use of tallow and used cooking oil as feedstocks. This policy makes these materials more attractive compared to vegetable oil made from US-grown soy, posing a challenge for global soy oil markets.
Tallow is not only used in biofuels but also in products ranging from pet food to soap. Its abundant supply in Brazil, where cattle slaughter rates are high, has positioned the country as a leading exporter. The US market has seen a fourfold increase in tallow imports since 2019, reaching a record 779,300 metric tons in 2023.
The rise in tallow imports is exacerbating challenges for the US soy oil industry. The US market has also been flooded with waste cooking oil imports, primarily from China, prompting soybean processors to lobby for increased import tariffs.
In summary, the growing reliance on tallow for biofuel production is reshaping the US renewable fuel landscape, diminishing the role of soy oil, and posing significant challenges for soy oil markets.
(By Commoditiescontrol Bureau; +91-9820130172)
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