Biodiesel production is booming in Brazil and Argentina and will put a pinch on exports of soybean oil, the feedstock for making the biofuel, says the Agriculture Department. Biodiesel is forecast to consume one-third of soy oil in the two countries during this marketing year, double the amount that was used six years ago. “In contrast, exports are forecast to fall from more than half of total use to just over 40 percent over the same period,” said USDA’S “Oilseeds: World Markets and Trade” report. Brazil and Argentina are the largest soybean producers in the world after the United States.
“Several factors are responsible for the increase in biodiesel production,” said USDA. In Brazil, there is a large fuel market and there is a mandate to blend biodiesel into fuel. In Argentina, biodiesel is a more profitable export product than soybean oil. “Limited export growth from South America will likely encourage buyers to either seek out other sources such as the United States or Europe, or alternatively substitute other vegetable oils,” said the report.