Lang
Argentine tallow prices softened this week as weak domestic demand and a lull in export activity weighed on the market, according to the latest assessment from Fastmarkets.
The publication assessed tallow with a maximum of 5% free fatty acids (FFA), fob Argentina, at $1,230-1,250 per tonne in the week to Thursday, narrowing from $1,230-1,290 per tonne a week earlier.
Market sources told Fastmarkets that approximately 5,000 tonnes of tallow are scheduled to load from Argentine ports bound for the United States. The assessed values, however, continue to reflect August shipment, with both buyers and sellers largely on the sidelines. Argentine exporters are concentrating on executing previously concluded deals, while US buyers are holding back in anticipation of more favorable entry points into South American markets.
'Local US tallow is still expensive, but it doesn't make sense to import if the product arrives at similar prices, considering there's still the 45Z to take into account,' one source said, referring to the US clean fuel production tax credit.
On the other side of the trade, Argentine suppliers expect a pickup in US consumption from October onward. Some exporters were reportedly sourcing tallow delivered to their tanks at levels comparable to those traded in the domestic Argentine market.
'There's a lot of different quality requirements from domestic buyers and not every producer is in the export market,' another source noted. Market participants also pointed out that several major exporters are vertically integrated processors, which limits the volume of tallow they need to source from third parties.
In the domestic market, Fastmarkets assessed common tallow with a maximum of 3% FFA, exw Argentina, at 1,420,000-1,450,000 Argentine pesos ($948-968) per tonne, narrowed from 1,420,000-1,500,000 pesos per tonne a week earlier. Prime tallow with a maximum of 2% FFA, exw Argentina, was assessed at 1,460,000 pesos per tonne, down from 1,520,000 pesos per tonne in the previous week.
Domestic buying interest remained subdued, with producers cautiously withholding sales as they await clearer signals from export markets. Sources indicated that current export volumes are insufficient to meaningfully support domestic prices, while softer local consumption has made the market less responsive to fresh export activity at this stage of the year.
'Looks like prices would be rangebound in the near term, despite export activity, since we've been seeing little movement domestically,' a third source commented.
'It's a buyers' market, but buyers are quiet,' a broker added.
According to sources, domestic end-consumers are increasingly turning to cheaper cooking substitutes such as soyoil, as constrained purchasing power limits demand for higher-priced tallow. Smaller companies are also facing cash flow pressures, raising concerns that they may be unable to hold product in storage until receiving more attractive bids.
'Export deals are offering both better prices and quicker payments,' one source concluded.
Source: Fastmarkets