Animal fat market faces a disruption as supply availability becomes an issue

Pork Fat

Brazil

Market & Price Trends

Caio Alves

Published Feb 26, 2021

The good demand for tallow, especially beef's for the production of biodiesel, resulted in the valorization of animal fat in the domestic market. With an appreciation of 1.5% ~ 5.3% per month on the sypply side, a curve that started been shaped since July according to producers.

For the short term, the expectation is to have an uptrending demand in course in the domestic market.
At the beginning of the pandemic, no one had any idea what was going to happen and the drop in demand for Fat & oils was huge. Those who worked with exports took advantage of the depreciation of the Brazilian exchange rate and exports were at a full swing, resulting on supply interruption and even in a shortfall to become a constant, as we had a boost and offsetting peaking sales. In relation to tallow / pork fat, the problem still lies in the significant reduction on slaughterhouse activities, which has further reduced the availability of raw material. This generates a predisposition for the domestic market to absorb and pay higher premiums by limiting exports, even because there is no inputs in sufficiency. The meat in natura also suffers from low demand, prices are plunging.

According to Secex data from January, 62.2 thousand tons of pork were exported, considering processed and fresh products, expressive drops of 24.4% compared to December and 8.6% compared to the previous year. January / 20. It is also the lowest volume in 17 months. These data corroborate the low performance of the sector and points out that China has a strong role in the movement.