Timothy Ramey, senior research analyst at D.A. Davidson & Co., told CNBC’s “Squawk on the Street” that the proposed Tyson Foods-ConocoPhillips venture to produce biodiesel from animal fat will plump Tyson’s bottom line.
Tyson will receive a tax benefit from the deal, and the increased demand for animal fat will boost the price of tallow.
“They have the ability transfer (tallow) at market prices to ConocoPhillips, but aren’t compelled to sell to ConocoPhillips, either,” Ramey said.
Tyson Foods, the world’s largest meat producer, announced Monday that it will team up with ConocoPhillips to produce and market biodiesel fuel for U.S. vehicles using beef, pork and poultry fat. The companies have worked together for about a year to combine Tyson’s knowledge of protein chemistry and production with ConocoPhillips’ processing and marketing skill to introduce a renewable diesel fuel.