BFT Continues to Defy Past Seasonal Trends

BFT Continues to Defy Past Seasonal Trends

Four cars of packer Bleachable Fancy Tallow (BFT) traded higher into/through the Chicago market. Two cars of lard traded up late yesterday as well.

The BFT market continues to buck the seasonal trend. Over the last ten years, the Chicago packer BFT market has traded higher, relative to September twice. The average price move from September to October from 2010 – 2019 has been down 3.6 cents per pound. The stronger soybean oil market has helped support prices through the end of the third quarter and into the fourth, but historical relative prices to both markets suggest a value in the 27 – 29 cents Chicago range. This has obviously been a historically unique year in all facets of life, and the tallow trade has certainly not been immune. The seasonal support may simply be a case of the risk of turning material down at steady to higher prices outweighing the cost of buying BFT at steady to higher prices. End-user demand has been constant at current prices, and palm stearin is still priced well above BFT. There’s additional export demand in the market and simmering demand in the interior that could create new trading pathways that would make buying back into the BFT market more costly. Simply put, there are plenty of reasons why the market should trade lower, but it’s going to take a couple of big volume buyers that are willing to say “no” before anything extra pops up and drives prices lower. Typically, this is the time of year when that happens, but it may be that a fear that a “no” means losing the place in the supply chain to renewable diesel, export, or even being caught short from COVID downtimes while case numbers are on the rise around the country.

 

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