Brazil’s biodiesel boom soaks up soybean oil, reducing availability for exports

Surging biodiesel production in Brazil is diverting soybean oil to domestic fuel use, squeezing export availability and contributing to elevated prices through early 2025, according to the monthly US Foreign Agricultural Service report released April 10.

Over the past decade, Brazil has more than doubled its industrial soybean oil consumption as rising biodiesel mandates drove demand for domestic fuel.

This expansion in biofuel use has propelled a 52% jump in soybean oil production and spurred soybean crush capacity. However, domestic demand has outpaced output gains, squeezing exportable volumes, the report said.

In marketing year 2024-25 (October-September), Brazil’s soybean oil production was projected to reach a record 12 million mt. Yet, exports were forecast at just 1.3 million mt, nearly unchanged from last year, despite the increased crush.

The National Energy Council’s decision in February to hold the biodiesel blend rate at 14% instead of raising it to 15% in March reflected inflation and fuel price concerns but was unlikely to significantly slow biodiesel expansion.

Meanwhile, the report said tight supplies from Southeast Asia were compounding the squeeze.

Though global palm oil production was projected to rise slightly in 2024-25, export availability was expected to shrink as Indonesia channels more output into biodiesel.

Also, reduced palm oil exports from Malaysia and Thailand, coupled with limited sunflower and rapeseed oil availability, have sustained elevated vegetable oil prices globally, the report said.

Soy complex shifts

The global oilseed market is also undergoing significant shifts. Brazil’s soybean usage data comprising trade, crush, residual use and stocks led the USDA to revise up its MY 2023-24 production estimate, raising global oilseed carryout levels.

At the same time, Argentina’s strong soybean harvest and increased crush capacity could temper price growth later this year.

The USDA’s World Supply and Demand Estimates report released April 10 raised the soybean crush estimate 10 million bushels to 4.42 billion bu on higher soybean meal domestic use and soybean oil exports.

The soybean oil export increase was based on export commitments, the USDA said.

The report reduced soybean oil for biofuel based on the pace to date. However, it forecast stronger use later in the marketing year due to tariffs impacting imports of other biofuel feedstocks, like used cooking oil.

The WASDE report lowered its projected soybean meal price $10 to $300/st and raised the soybean oil price 2 cents to 45 cents/lbs.

Global MY 2024-25 soybean supply and demand forecasts include higher beginning stocks, lower production, and higher exports, crush and ending stocks.

Soybean beginning stocks were raised 2.7 million mt, mainly on a revised MY 2023-24 crop for Brazil. After a review of 2024 disappearance data, Brazil’s 2023-24 production is raised 1.5 million mt to 154.5 million mt.

The global soybean crush was increased 2 million mt to 354.8 million mt on a higher crush rate for Brazil, Argentina, Ukraine and the US, according to USDA data.

Ample global soybean meal supplies, lower prices and lower supply of alternative oilseed meals has led to increased use of soybean meal consumption globally.

However, despite an increased soybean crush, the WASDE report lowered its global vegetable oil production figure for MY 2024-25 0.9 million mt to 228.1 million mt as gains in soybean oil production are offset by lower palm oil production.

The report projected palm oil production down 1.3 million mt to 78.2 million mt on lower output for Indonesia, Malaysia and Thailand.

In China, rapeseed imports for My 2024-25 are raised by 1 million mt to 4 million mt, spurred by rapid import activity, as per FAS report.

A trade dispute with Canada, however, has complicated the picture.

China imposed a 100% tariff on Canadian rapeseed products March 20, prompting the USDA to slash its forecast for China’s rapeseed meal imports by 800,000 mt to 2.2 million mt.

Chinese imports of rapeseed oil, mostly sourced from Russia, UAE, Belarus and Ukraine, remained steady at 1.8 million mt.

The FAS report said the overall global oilseed crush was up, led by increased soybean processing in Brazil and rapeseed utilization in China.

Meanwhile, the global protein meal trade has expanded on higher soybean meal exports from Brazil and Argentina, offsetting weaker Canadian rapeseed meal flows, the FAS report said.

Price outlook

Despite global supply challenges, the USDA kept its forecast for the US season-average farm price for soybeans unchanged at $9.95/bu, as per the report.

Soybean prices have remained mostly flat since the last WASDE update, though April began with declines amid tariff concerns.

US soybean oil prices have outpaced their South American counterparts following early April biofuel policy announcements, while tight palm oil supplies and constrained sunflower seed and rapeseed availability continued to support elevated vegetable oil prices.

With rising protectionism, volatile weather and biofuel mandates reshaping trade flows, market watchers expect continued price sensitivity to policy shifts and supply shocks in the months ahead.

Tags: soybean oil, Brazil