Brazil, the world’s largest soybean producer, is processing record volumes of the crop, but a delay in the country’s plans to increase local demand through biofuel mandates has left a surplus of cheap soybean oil supplies being shipped abroad. Although soybean oil futures in Chicago have risen nearly 56% this year, prices at Brazilian ports have moved much more slowly. The discount for soybean oil at Brazil’s main port, Paranaguá, is now the widest since 2023, according to Commodity3 data. The low cost helped lift Brazilian soybean oil exports by 47% through April this year, reaching the second-highest volume for the period in the past two decades. Soybean oil is used in most of Brazil’s biodiesel production, but expectations that the country would increase the mandatory blending requirement by March were frustrated. Brazil currently blends 15% biodiesel into diesel, and an increase to 16% is pending technical tests.
Source: Bloomberg Línea/Datamar News