The Brazilian market observes a surge in the price of soybean oil, as reported by the Center for Advanced Studies in Applied Economics (Cepea). This price hike is attributed to heightened internal demand, particularly from the food industry, which is striving to secure sufficient volumes amidst competition with the biodiesel sector.
Cepea highlights that representatives of food factories are aiming to secure volumes for the medium term, anticipating an increase in biodiesel production in Brazil. Soybean oil serves as the primary raw material for biodiesel production in the country, constituting approximately 70% of the total.
The escalation in soybean oil prices follows the implementation of the 14% blend of biodiesel in diesel, which took effect one month ago. The decision, made by the National Energy Policy Council (CNPE), expedited the previously scheduled timeline. Initially, the blend was set to increase to 13% in 2024, with a mandate allowing for up to 15% by 2025.
The introduction of diesel with 14% biodiesel (B14) addresses the demand within the biofuel production chain. Estimates suggest that B14 will necessitate 8.9 billion liters of renewable fuel production this year, up from 7.3 billion liters in 2023.
In response to this evolving landscape, the Brazilian Association of Vegetable Oil Industries (Abiove), representing the soy industry, forecasts a production of 11 million tons of soy oil in 2024. Of this total, approximately 5.8 million tons are expected to be allocated to biodiesel plants.
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