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In December, pet food and animal feed producers, buyers from the oleochemical industry and biofuel producers started actively booking first-quarter volumes in the EU animal fats market; this gave support to prices, which increased by 5-10% (depending on quality) compared with the fourth quarter. Trade sources told Fastmarkets they expect active trading to continue in January.
Rendering activity is typically high in the fourth quarter due to seasonal meat demand, which results in a higher availability of raw material, while demand for animal fats also increases, particularly among pet food and animal feed manufacturers.
“Fast-moving consumer goods (FMCG) market [participants] buy actively around Christmas time, boosting fats demand, but then they normally slow down in January,” a trader told Fastmarkets.
As rendering slows down in January, animal fats availability decreases, which supports prices; activity then recovers in February, Fastmarkets understands.
“Increased biofuel blending mandates and newly introduced sustainable aviation fuel (SAF) production obligations will keep animal fats demand high; plus, vegetable oils are expensive, with no bearish factors in sight,” a Europe-based producer told Fastmarkets.
Vegetable oil prices jumped on tighter supply and news about the implementation of the European Union Deforestation Regulation (EUDR), contributing to increased demand for animal fats in the past few months, Fastmarkets understands.
The introduction of the EUDR was expected to complicate the trading of palm products into Europe, sources said. The new restrictions and regulations would be implemented on December 30, but the European Commission decided to postpone it until December 30, 2025, relaxing market tensions after a price spike.
The price spread between January-delivery mixed animal fat, 15% free fatty acid (FFA) content, DDP North-West Europe (NWE) and crude palm oil CIF Rotterdam reached €442.40 ($461) per tonne on December 12, below the highest yearly level of €486.61 per tonne recorded in November; the spread reached a yearly low of €9.04 per tonne in May.
The spread between that grade of animal fat and rapeseed oil FOB Dutch mill was €216 per tonne on December 12; its yearly high was €370 per tonne in November, while the lowest spread was assessed at €46 per tonne in February.
China’s pace of meat imports is another important factor to monitor throughout the year, sources said.
European countries were China’s top meat suppliers before the country started working on becoming self-sufficient several years ago, increasing domestic production and building state reserves, as well as switching to other sellers, such as Russia, sources said.
“China auctions the state reserves every year internally, and then they come to the market and buy a lot at once, spiking [animal fats] production in Europe; after that, they do not return for nearly a year,” a market source said.
China’s pork import flow from the EU slowed down in 2024, with 480,258 tonnes imported in January-October, down by 62% from the five-year average, according to Global Trade Tracker (GTT) data analyzed by Fastmarkets.
“China’s meat buying from Europe will continue declining; they are buying less from Germany and Spain and increasing local production,” a Europe-based source said.
This could potentially result in a lower availability of raw materials for animal fat production, which could cause supply issues for biofuel production and other fat-consuming industries, Fastmarkets understands.
“Generally, demand for animal fats will continue to grow in 2025, while supply will most likely decrease,” a second market source said.
European Commission data also showed that monthly pig slaughter fell by 8% in January-October to 182,270 head, compared with the five-year average of 198,057 head.
Prices for European Category 3 animal fats were relatively stable in 2024, with assessed prices fluctuating in the range of €50-100 per tonne, depending on the quality specification.
Prices for animal fats with up to 15% FFA fell by €85.50 per tonne year on year to average €825 per tonne DDP NWE in 2024, compared with the average of €910.50 per tonne DDP in 2023, Fastmarkets data showed.
Other qualities followed a similar trend, with edible-grade beef tallow dropping by €162.66 per tonne year on year to an average €1,018 per tonne in 2024, down from the average of €1,180.70 per tonne recorded in 2023.
Edible-grade beef reached its highest price in late January, assessed at €1,125 per tonne DDP, and the lowest price was recorded in September, at €945 per tonne, pressured by low demand in Europe alongside other fat grades.
All animal fat grades increased in price in late May on rumors about the European Commission announcing anti-dumping measures against Chinese biodiesel, which were announced in July as a result of an investigation launched in December 2023.
Preliminary duties were implemented on August 16, adding to market uncertainty, while definitive duties are expected to be announced in February 2025, a bullish factor for next year.
Most buyers turned to a hand-to-mouth buying pattern, booking necessary volumes for spot deliveries, while trade for the first quarter of 2025 was delayed until December amid market uncertainty.
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