Market Morsel: Exxy hot chips on the way.

Grain | 4th May 2022 | By Andrew Whitelaw

Market Morsel

About a week ago, I wrote about the impact of palm oil exports being banned from Indonesia (see here). I thought it was time to have a look at some alternate oils (offals), especially the chip shop favourite tallow.

Vegetable oils are replaceable; buyers can chop and change what they use based on price (and quality permitting). This is seen in relationships between various oilseeds, but they also have an impact on animal fats.

The first chart below shows the monthly relationship between tallow and palm oil prices. We can see the two prices, whilst different commodities follow a similar path. They share a strong correlation (0.85). Whilst correlation does not always equate to causation, this relationship is causal, as palm and tallow have similar uses.

While we are going into the offal bucket, meat and bone meal is another important commodity in Australia, especially for those feeding livestock.

The second chart below shows the meat and bone meal (MBM) pricing and soymeal futures (in A$/mt) over the past 22 years. These two commodities also follow similar patterns, as they are replaceable by one another.

While we don’t necessarily advocate for users of tallow and MBM to use palm and soymeal futures, that may be possible. It is important to keep a close eye on these markets as they are likely to highlight the trend.


  • meat
  • Wheat
  • oilseeds