Imports of Brazilian tallow into the USA for use in biofuel production surged by 377% in the first four months of this year compared to the previous year, edging out US soyabean farmers, Bloomberg reported.
According to US government trade data, total US tallow imports have increased four-fold since 2019 to a record 779,300 tonnes in 2023, with Brazil’s share of the shipments jumping from 23% last year to 40% in the first four months of this year.
US fuel producers including Diamond Green Diesel and Marathon Petroleum had been sourcing cheaper raw materials from overseas in a bid to boost margins, the 13 June report said.
Renewable diesel made from waste fat or used cooking oil (UCO) had a lower carbon score than soyabean oil and was eligible for higher tax credits in California, where a high percentage of US green diesel was consumed, Bloomberg wrote.
“As long as the rules are the way they are, these biofuel companies are going to use whatever is cheapest,” John Baize, an independent analyst who also advises the US Soybean Export Council, was quoted as saying.
With a new federal tax credit also due to be introduced next year, tallow and UCO would become more lucrative as feedstocks compared to vegetable oil made with US soyabeans, the report said.
With global agribusiness giants such as Bunge Global and Archer-Daniels Midland (ADM) counting on increasing demand for crop-based green diesel feedstock, competition from foreign imports was impacting profits and affecting expansion plans in the USA, Bloomberg wrote.
Tallow is abundant in Brazil, which slaughters more cows than any other country except China, according to the report.
Brazil rarely exported tallow until 2022, when Texas-based Darling Ingredients acquired Brazil’s largest independent rendering company FASA Group. Since then, FASA had become a waste fat supplier to Diamond Green Diesel, a biofuel venture between Darling and Valero Energy Corp, Bloomberg wrote.
“Brazilian tallow has been folded into the US biofuel feedstock mix, in part due to Darling Ingredients’ integration of FASA,” Bloomberg Intelligence analyst Brett Gibbs said.
With the US biofuel feedstock market also impacted by record UCO shipments, mostly from China, a group of US soyabean crushing companies had been pushing for an increase in import tariffs, the report said.
