Four cars of packer BFT traded at $0.3050 Chicago this afternoon. Manly, IA DCO traded as low as $0.2650 delivered. Yellow grease action was reported $0.2200 – $0.2300 FOB Mo. River. Sources have commented that feed buyers are pushing for lower values and biodiesel demand is not strong enough, for AV product, to move elsewhere.

Guest Commentary

Tallow Prices Consolidate As Weak Vegetable Oil Weighs on Prices

Tallow prices have remained stead and appear to be consolidating and forming a bull flag pattern. This is a continuation pattern that follows a robust up move, where prices pause and then refresh.  Recent declines in vegetable oil have weighed on tallow prices, and this years harvest was robust which should make supply of bean oil plentiful.  Resistance on tallow is seen near the bollinger band high which is 2-standard deviations above the 20-week moving average at 34, while support is seen near the 20-week moving average at 30.  Historical volatility has recently contracted which is reflected by the narrowing of the bollinger bands.

Weekly momentum is positive but turning neutral as the MACD (moving average convergence divergence) index prints in the black, but the trajectory of the MACD histogram is flattening which reflects consolidation.

Daily momentum is negative as the MACD generated a crossover sell signal in late November and continues to print in the red with a downward sloping trajectory which points to lower prices for tallow.

The weekly RSI (relative strength index) has started to flatline near the 65 level which is the upper end of the neutral range and just below the overbought trigger level of 70.  In early November, just below the daily MACD generated a sell signal, tallow prices were overbought which signaled a potential correction.  Level of 70 are considered overbought while reading below 30 are considered oversold.

Please contact David Becker at [email protected] with any questions or comments in regards to Tallow Prices Consolidate As Weak Vegetable Oil Weighs on Prices.

Please contact Ryan Standard at 563.223.9021 or [email protected] with any questions, comments or trading.

Broiler-fryer slaughter under federal inspection for 13-Jan-17 and 14-Jan-17 is estimated to be 37,247,000 head up 12.28 percent from a week ago and up 7.4 percent from a year ago. (Last week 33,174,000, last year 34,688,000)

Weekly broiler-fryer slaughter under federal inspection for the week ending 14-Jan-17 is estimated to be 166,673,000 head up 12.79 percent from a week ago, and up 2.38 percent from a year ago.(Last week 147,773,000, last year 162,806,000)