Market News & Headlines >> Brazil Soy Exports to Fall Slightly on Higher Biodiesel Mandate

Brazil’s decision to boost the mandatory amount of biodiesel that must be into diesel fuel starting in March 2024 will create additional domestic demand for an estimated 5 million metric tons of soybeans and potentially cut Brazilian soybean and soyoil exports, according to analysts contacted by Reuters News Service.

Brazil's government this week boosted the mandatory biodiesel mix to 14% from a cur-rent 12%. The situation could be a boon for rival exporters like Argentina, which is expected to reap a full harvest after a drought destroyed its soy in 2023 and crippled its soyoil and soymeal exports in the period.

"I believe we could see a reduction in Brazilian soyoil exports of between 0.8 to 1.0 million tons, which would leave us with a total [domestic] demand for soyoil between 0.2 million and 0.4 million tons greater than in 2023," said Pedro Schicchi, grains and oilseeds analyst at hEDGEpoint Global Markets.

Some 70% of Brazil's biodiesel comes from soybeans after it is processed into soyoil. That means Brazilian soy processors are expected to crush between 1 million and 2 million tons more soybeans in 2024 to cater to additional biodiesel demand, Schicchi said. The analyst noted that disregarding existing stocks, Brazil's exportable soybean surplus could be about 2 million tons lower than this year's.