November 3, 2008

Higher demand for bio-fuel bolsters soy oil in Brazil


Three months after the government decided to increase the obligatory addition of biodiesel to ordinary petroleum-based diesel sold at service station pumps in Brazil, the effect on the industry of inputs that supplies the sector already can be felt.


With one percent more in the mix, raising it to 3 percent bio-fuel, i.e., B3, and the impact is expressive on the volume of Brazilian soy oil that reaches the export market.


The sector industry, which in 2007 exported 2.5 million tonnes of raw material, this year, should embark 12 percent less, only 2.2 million tonnes, according to the data and projections of the Brazilian Association of Vegetable Oil Industries (Abiove). Abiove economist Daniel Amaral observed that export projections for the next crop are even a little lower. So far this year, the country has exported 1.8 million tonnes of soy oil of production that should reach 6.2 million tonnes.


According to the Foreign Trade Secretariat (Secex), soy oil embarkations in August (the month following the change in the law) totaled 210,000 tonnes, down 107,000 from July.


This 33 percent decline reflects at least in part the higher domestic demand for the product on the part of refineries that produce the bio-fuel, he said.