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Brazil Soy Crushers’ Lobby Pushes For Rise In Biodiesel Blending

Brazilian oilseeds lobby group Abiove is pushing the government to clearly signal whether it plans to raise its biodiesel blending requirement after a surprise move to temporarily cut it this month.

The government is taking on “an enormous risk” by failing to send a swift and strong message to crushers regarding the future of blending, Abiove chief André Nassar told Reuters in an interview.

“We think they need to signal to the market that it is going to raise the mix,” he said. “They need to do that everyday.”

On April 9, the government cut its biodiesel blending requirement to 10% from 13% to keep fuel prices down at the pump. About 70% of Brazil’s biodiesel is produced from soy oil, whose prices have risen due to strong demand and tight supply for soybeans.

Depending on how the situation plays out, Abiove, which represents companies like ADM, Bunge, Cargill and LDC, said Brazil could export more soybean and soy oil this year.

Abiove sees Brazil’s soybean exports at 84.5 million tonnes this season, and soyoil exports at 700,000 tonnes. Those forecasts may be revised, Nassar said.

Nassar said the lower blending requirement, which applied to last week’s biodiesel auction only, caused the price of the fuel to fall in relation to the price of soy oil. It may also hurt crushers’ margins at a time when Chicago soy prices are at multi-year highs.

Biodiesel auctions take place every two months, but the authorities should signal now what the mandatory blending is going to be so that crushers can prepare, Nassar said.

“Now the government has reduced the biodiesel mandate,” he said. “Convincing it to go back is much more difficult than dealing with market uncertainties.”
Source: Reuters (Reporting by Ana Mano; Editing by Richard Chang)

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