SAO PAULO (Reuters) -The use of beef tallow for biodiesel production in Brazil is expected to rise amid a forecast increase in domestic sales aimed at boosting output of the biofuel, industry sources said, noting a rise in beef tallow's domestic use would also offset a likely drop in U.S. import demand after the imposition of tariffs on Brazilian beef and byproducts.

Brazilian beef tallow exports boomed through July thanks to strong U.S. demand. With 290,800 tons shipped in the period, the country sold nearly 91% of the total exported in 2024, Bebedouro-based Scot Consultoria told Reuters. The U.S. accounted for almost 98% of shipments, Scot's data showed. 

But now, a 50% U.S. import duty on certain Brazilian products will make Brazilian beef tallow sales "prohibitive" in that market, Andre Nassar, president of Brazil's oilseed lobby Abiove, said in an interview. However, he noted Brazilian demand may partly mitigate the impact of lower exports to the U.S., citing future beef tallow purchases by biodiesel companies, including from vertically integrated meatpackers which produce biodiesel but don't make enough of the ingredient they need in-house.

Abiove represents processors of soy, which is used to make 75% of Brazil's biodiesel.

Brazil's beef tallow exports gained pace after a sharp fall in U.S. cattle herds, which cut local output and shifted demand to Brazilian suppliers. 

Alcides Torres, founder of Scot, said that conceivably, exports surged through July because exporters sped up shipments ahead of the tariff hike.

"But these are palliative measures," he said, noting the now tariff is practically "an embargo" on beef and by-products' exports going forward.

As the August 6 deadline for applying tariffs has passed, Torres said Brazilian exporters could send product to neighboring countries, which would then be re-exported to the U.S. to avoid the hefty duty.

The strategy may expand Brazil's international buyer base while helping keep shipping volumes, Torres said.