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Market Activity for Animal Fats

Posted on Jan 16, 2017 in U.S. and International Animal Fats & Protein

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 davesbecker@gmail.com 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 ryan@thejacobsen.com 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)

 

 

USE LIMITATION: Unless expressly specified, you may not modify, copy, distribute, transmit, display, perform, reproduce, publish, license, create derivative works from, transfer, or sell any information, software, products or services obtained from the JPC Sites/Services. All rights not expressly granted herein are reserved.

Footnotes

  1. All prices are FOB unless otherwise noted.
  2. An asterisk (*) denotes a price correction/adjustment versus the previously reported price.
  3. ++Delivered Chicago Switching district or for Rule 11 beyond Chicago
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Hide Activity and Analysis

Posted on Jan 16, 2017 in Hide & Leather

The US hide market ended the week with volume a little down, steers steady and cows firm. Packer HTS traded from $71 to $73, BBS from $72 to $73 and HNS from $75 to $75.50. Some reports from China note the market was more active as the China New Year holiday (January 28 to February 2).
Week-Ending Slaughter

The week’s estimated cattle slaughter was 609,000. The previous week’s kill was 537,000. Year-to-date slaughter at 1,146,000 is up 2.3% from 2016.

Today’s Market

There was a moderate number of sales quoted today with steers steady and cows firm. 

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2017 Imports Expected to Remain Strong

Posted on Jan 16, 2017 in Biodiesel, Vegetable Oil, and Grain

Per the US Census Bureau, the United States imported 92,901,091 gallons of biodiesel during the month of November.  This is a 21% increase from the 76.83 million gallons imported in October and is 63 million gallons more than what was imported during November of 2015.  In a year over year 11-month comparison, biodiesel imports are up an eye-popping 93% from 2015.  2015 held the previous high for all-time biodiesel import activity. Through November of 2015, biodiesel imports totaled 310.2 million gallons.  This year they are 597.6 million gallons.

Out of the seven countries recording shipments to the US, three of them account for 94% of the activity through November. Argentina, Indonesia, and Canada are the Big Three.  Argentina shipped 61 million gallons, 66% of the monthly total and 11% more than what they shipped in October.  Indonesia sent 15.9 million gallons, accounting for 17% of the monthly total and 58% more than shipped in October. Canada exported 7.1 million gallons, 8% of the Nov total and up 10% month over month. 

Argentina, Indonesia, and Canada account for 94% of all biodiesel imported in 2016, 562.93 million gallons. Renewable diesel imports, not part of the US Census Monthly report data, were 177.5 million gallons through October and are projected to be 205 million gallons at the end of November.

By year-end, The Jacobsen forecasts that biodiesel imports will reach 690 million gallons and renewable diesel imports will be 234 million.  Combined, the import total could achieve 924 million gallons. The D4 mandate is 1.9 billion gallons for 2016.  A figure that was easily surpassed. Biodiesel imports from Malaysia and Indonesia do not have approved pathways to offset the D4 mandate, but can produce D6 RINs.  Backing out Malaysia’s and Indonesia’s 2016 production, the remaining biodiesel imports are expected to have satisfied 30% of the mandate.  Adding in expected renewable diesel imports, the total amount of the mandate satisfied by foreign countries advances to 42%.

The blender’s tax credit expired for the 5th time since being put in place in 2005.  Previous expirations occurred at the end of 2009, 2011, 2013 and 2014. Typically, import activity subsides in years that the tax credit is not in place.  This can most recently be seen in 2014.  In 2013, the BTC was put back in place in January, made retroactive to Jan of 2012, and extended through December of 2013.  Imports that year hit a record high of 339.7 million gallons for biodiesel.  The credit lapsed until the end of 2014.  Without the BTC in place, 2014 biodiesel imports only totaled 193.98 million gallons.  In December of 2014 the BTC was retroactively restored for all of 2014 but it was not extended for 2015 and at 12/31/14 it lapsed again.  However, in 2015, imports hit an all-time of high (at the time) of 356.1 million gallons. 

Imports grew 184% in 2015, even in the absence of the blenders tax credit being in place. An extra 162,131,319 gallons of biodiesel were imported and almost all of it was due to increased import activity from Argentina.  During 2015, Argentine imports increased by 322% or 151,962,878 gallons, accounting for all but 10 million of the increased import activity. 

The blenders tax credit was reinstated in December of 2015, retroactively covering all of 2015 and extending through 2016. This has allowed 2016 to be a banner year for imports.  With the tax credit now lapsed, it is likely that imports will remain strong for 2017.  62% of the biodiesel imported during 2015 originated in Argentina. Argentine imports are projected to total 366.67 million gallons for 2016, which is more than all the biodiesel imported in 2015.  Argentina has no other home for their biodiesel.  The EU has appealed the ruling allowing Argentine imports and Peru has imposed significant tariffs on Argentine shipments. This has basically left the US as Argentina’s export market. Argentina is also supporting its industry.  They recently announced that they will continue and extend their differential tax treatment for the production of biodiesel throughout 2017.

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Animal Protein Market Activity

Posted on Jan 16, 2017 in U.S. and International Animal Fats & Protein

Trading in the MBM markets was reported steady again today out of the Mo. River and Panhandle markets for ruminant and Mo. River for porcine. Sources continue to report ample supplies of low protein material in the market, but thus far this hasn’t had an effect on the 50 pro pure beef market.

Feathermeal was reported at $435 FOB Minnesota today and at $450 Mid South. Prices out of the Delmarva market consolidated to $390 – 410. Sources have commented that demand from the organic fertilizers is picking up and some feel confident turning away lower priced export bids. Sales for quick ship material have been sold in light volume as high as $500 FOB. 

Animal Proteins – International

Trading into China was quiet this week and prices are unchanged. Sources commented that they expect the market to remain quiet until the first full week of February due to the New Year holiday. Trading into Indonesia was quiet as well and no price changes were reported. Sellers outside of the US continue to lament the lower prices that buyers are seeing out of the US market.

Domestic action in the Australian market was flat with tenders settled last week. Supply remains tight coming off of the holiday stretch. The combined cattle slaughter in Australia for weeks ending 12/30 and 1/6 is 96,034 head. Export values widened on MBM and FM to $550 – 600 and $650- 700, respectively.

The New Zealand market was similarly quiet, but sources did report lower prices on 45 pro and 50 pro MBM. Sellers remarked that despite the tight supplies in the country, competition from the US has pressured values lower. Prices for smaller market exports continue above the NZ$610 mark.

US interior trading for MBM has flattened after the run up seen over the last three weeks. Ruminant MBM is trading as low as $220/MT FOB US, but the bulk of material is moving in a range of $265 – 280/MT FOB. Feathermeal prices continue to climb with prices starting to push north of $500/MT in the Midwestern and Mid South regions of the US. Coastal trading is lower, but is still seeing action in the $440/MT range.

US Animal Protein Exports

November exports of feathermeal were up 253 MT from October and down 34 MT from November of 2015. YTD figures are well behind 2015, down 22,415 MT compared to the same time period last year. Inedible meatmeal product is up 129,825 MT compared to the Jan – Nov time period last year. Volume for November was down 12% compared to October.

Table 1.

Figure 1.

Figure 2.

Please contact Ryan Standard at 563.223.9021 or ryan@thejacobsen.com with any questions, comments or trading. 

  Today Last Week Last Year  WTD
Broiler Slaughter 33,319,000 32,974,000 31,962,000 132,645,000

USE LIMITATION: Unless expressly specified, you may not modify, copy, distribute, transmit, display, perform, reproduce, publish, license, create derivative works from, transfer, or sell any information, software, products or services obtained from the JPC Sites/Services. All rights not expressly granted herein are reserved.

Footnotes

  1. All prices are FOB unless otherwise noted.
  2. An asterisk (*) denotes a price correction/adjustment versus the previously reported price.
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