The US animal fats market has moved from being priced as a byproduct to being priced like an energy feedstock, according to a 2 April report by commodity price reporting agency Fastmarkets.
Biofuels now accounted for an estimated 40-50% of total US fats consumption, with renewable diesel the primary driver since capacity expanded rapidly in 2020-21, Fastmarkets sustainable commodities analyst Sarah Schneider said at the agency’s 18 March market outlook seminar on the animal feed, fats and proteins industry.
Under the US 45Z tax credit, lower carbon intensity (CI) feedstocks – including tallow and used cooking oil (UCO) – earned greater value than crop-based alternatives, accelerating their pull into fuel production, she added.
In March 2026, geopolitical tensions pushed crude oil and soyabean oil sharply higher, with tallow and white grease reaching near eight-month highs and Gulf UCO approaching four-year highs.
However, Scheider said fat supply could not respond to price signals as it was tied directly to meat production cycles.
Cattle slaughter was down more than 6% in 2025 and, in the first quarter of 2026,
was running almost 8% below the previous year, she added.
With expanding demand and inelastic supply, price was the only adjustment mechanism, Schneider said.
Imports had historically filled the gap but were increasingly unreliable. she said.
A 50% tariff on Brazilian tallow – since reduced to 10% – and 45Z’s restriction of credits to North American feedstocks had made imported material significantly less competitive, Scheider concluded.
The policy picture, combining CI-based credits with growing renewable volume obligations, is one where demand was being amplified by mandate inside an already supply-constrained system, according to Schneider.
