New Argentina biodiesel law to weigh on international soyoil prices -industry
Argentine soyoil exports will likely rise, driving down prices internationally, due to a new law cutting the amount of soyoil-based biodiesel blended into common diesel fuel sold domestically, industry officials said on Monday.
Lawmakers in Argentina, the world’s No. 1 soyoil exporter, last week approved a measure allowing a reduction in the amount of soy-based biofuel to be mixed into domestically-consumed diesel.
The measure, backed by President Alberto Fernandez, was expected to sign it into law before the end of the month.
“The reduction of biodiesel used in fuels locally will reduce consumption of soyoil in Argentina. So we will have more soyoil to be exported. That could impact international soyoil prices, considering the large portion of the international market that Argentina has,” said Gustavo Idigoras, head of the CIARA-CEC agricultural export chamber.
Argentina exported a 5.36 million tonnes of soyoil last year, according to government data. India was the main buyer, taking 53.4% of those sales. China and Bangladesh came in second and third with 7.8% and 7.6% of total exports, respectively.
Argentina, also a major corn exporter and the world’s top supplier of soymeal livestock feed, has developed a huge biofuels industry thanks to its robust agricultural output and state support for biofuels being used in diesel and gasoline.
The new law, aimed at guaranteeing the sustainable use of biofuels in diesel and gasoline, was approved by the Senate on Friday after being passed by the lower house of Congress. It foresees a minimum use of biodiesel of 5%, which could drop to 3%, in diesel for sale to the public, from the previous 10%.
Argentina has some of the world’s biggest and most efficient soy crushing plants, making the country competitive against its agricultural export rivals Brazil and the United States.
According to the U.S. Department of Agriculture, Argentine soyoil averaged $1,191 per tonne last month versus $1,233 per tonne in Brazil and $1,608 per tonne in the United States.
“Lowering the blend in Argentina means higher bean-oil exports,” said Luis Zubizarreta, head of Argentina’s Carbio biofuel industry chamber. This, he said would put downward pressure on the price of Argentine soyoil.
With the blend at 10%, Argentina has consumed about 1 million tonnes of biodiesel annually, to be blended with biodiesel. With the new blend, that volume would be cut in half, Zubizarreta said.
Agriculture is the country’s top source of export dollars needed to refresh central bank reserves strained by a weak peso and grinding recession exacerbated by the COVID-19 pandemic.
Source: Reuters (Reporting by Hugh Bronstein and Maximilian Heath Editing by Marguerita Choy)