World Tallow Output Seen Declining for Second Year by Oil World

World tallow production is forecast to drop for a second year in 2014-15, led by declines in the U.S. and Australia, according to Oil World.

Output of tallow is seen falling to 8.43 million metric tons in the year through September 2015 from 8.49 million tons a year earlier and 8.53 million tons in 2012-13, the Hamburg-based researcher wrote in an e-mailed report.

Tallow is a by-product of beef and mutton production and is used in chemicals and food as well as to make biodiesel. U.S. exports of the fat are predicted to stagnate, boosted by “strong” domestic consumption on demand from the biodiesel industry, according to Oil World.

“A closer analysis of the U.S. market fundamentals reveals some alarming trends, namely declining production of the world’s largest tallow exporter,” Oil World wrote.

U.S. tallow production is seen at 3.39 million tons from 3.44 million tons in 2013-14 and 3.59 million tons in 2012-13, with exports of the fat forecast to “at best stagnate” from a year earlier at 610,000 tons. The U.S. share of world tallow exports may fall to less than 40 percent in 2014-15 from more than half on average in the decade through 2011-12.

Tallow exports from Australia are predicted to slide to 390,000 tons from 440,000 tons. Australia’s cattle herd was forecast to drop to the lowest in two decades by the middle of next year on drought in parts of New South Wales and Queensland, Meat & Livestock Australia said in a July outlook. The U.S. cattle herd shrank to the small in 63 years as of the start of this year as ranchers struggled to recover from years of drought.

Limited Supplies

Most of the growth in world tallow exports in 2013-14 was due to drought-induced slaughter in Australia, Oil World said.

“Ongoing strong demand in Brazil and Singapore combined with the above-mentioned limited export supplies in the U.S. and Australia is likely to raise the global dependence on substitutes, primarily palm stearin in the food and oleochemical markets,” the researcher wrote. Stearin is a chemical compound produced from tallow or palm; oleochemicals are those derived from plant and animal fats.

Peru fish-meal prices are rising on tight supplies and “diminishing hopes” for new production in the country in coming weeks, with free-on-board prices climbing to $2,240 a ton as of Nov. 13 from $2,050 at the end of October, Oil World said. Should the government grant a small quota following a survey to assess fish stocks, fishing will only start “rather late” in December, the researcher said.

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