November 29, 2007

Biodiesel to revive soy industry in Brazil

Rising demand for feed and the growing biodiesel market in Brazil are encouraging the soy crushers to invest in new plants.

US giant Cargill Inc. expressed plans to build a processor unit in Mato Grosso state, which would begin operating in 2009.

Bunge Ltd also confirmed its target to set up a new crusher in the area.

Cargill, Bunge and several other companies had to shut down soy crushing units in the recent years due to poor processing margins. Profits have been low during most of 2007.

However, prospects are changing the scene. Renato Sayeg of Tetras Brokers in Sao Paulo said that the link between soy and energy revives the soy industry.

Brazil will mix 2 percent of biodiesel into all diesel fuel sold in the country starting January 2008. The mandatory mix will then increase to 5 percent by 2013.

Growing demand for feed in Brazil from the booming poultry and pork industry also contributes to a better situation for crushers in the near term, analyst Leonardo Sologuren at Celeres consultants said.

Brazil's poultry production rose 10 percent on-year to 8.4 million tonnes. Pork production is forecast to reach a record high of 2.9 million tonnes, up 3.5 percent from 2006, analysts AgraFNP said.