September 25, 2007

Brazilian soyoil prices to increase by 15 percent 

Brazil's soyoil prices is seen to reach a historic R$2,300 (US$1,231) in December, the height of the soy off-season, according to oil consulting company Aboissa. 

The increase is 15 percent greater than the current R$2,060 (US$1,102) and 21 percent more than in December 2006, when trades were made at R$1,800 (US$963) a tonne, according to Gabriel Revuelta, an Aboissa market operator.

Bioenergy analyst Miguel Giegai J¨²nior from Safras & Mercado says the forecast is on target and shows how quotations of the product are linked to petroleum, adding soy oil is priced as energy. In the first nine months this year, quotations of the vegetable oil rose 32.5 percent on the Chicago Board of Trade (CBoT) while those of petroleum climbed 40 percent, according to the Gazeta Mercantil Information Centre.

The relation, according to Giegai, reinforces the thesis of viability soy oil use to produce biodiesel. Any glitch in the petroleum market affects soy oil and biodiesel products will have to go to strategic regions, like the interior of the country, such as the north of Mato Grosso, he said.

At current levels and projected future prices of soy oil, there already are other concepts for biodiesel in the market -- biodiesel as an additive and not a fuel, Revuelta explained. According to Giegai, agents already speculate about a quotation of R$3,000 (US$1,605) a tonne next year and its viability as a fuel will not be sustained even in the North of Brazil.