APLA ‘07: Soybean surge hurts Brazil biodiesel

18 November 2007 20:31  [Source: ICIS news]

By William Lemos

BUENOS AIRES (ICIS news)--A surge in soybean prices represents a major hurdle for Brazil’s nascent biodiesel industry, as the cost of the feedstock has soared by more than 70% in the last 14 months, a producer said on Sunday.

Brazilian soybean prices in November were at Brazilian reais (R) 2,300 ($1,315)/tonne, up from R1,350/tonne in September 2006, the producer said on the sidelines of the Latin American Petrochemical Association (APLA) conference in Buenos Aires.

The surge is due to local upward pressure from biodiesel, and also to an increase in international soybean prices, the source said.

Brazil’s biodiesel industry relies on soybeans to meet 70% of its feedstock needs. While the cost of soybeans has soared, the price of biodiesel has held steady at R1,860/cbm (cubic metre) for more than a year, the producer said.

Soybean oil accounts for more than 75% of the cost to produce the biofuel, the source said.

Brazil is expected to introduce a 2% biodiesel blend in 2008, per legislation approved in 2005. The mandate will trigger demand for 800m litres/year of the biofuel, as Brazil consumes about 40bn litres/year of regular diesel.

Brazil’s biodiesel capacity, as assessed by the government, is at 2.6bn litres/year, but effective capacity in the industry is estimated to be much smaller.

Biodiesel industry officials recently predicted Brazil would not have enough biodiesel to meet the 2% blend requirement in 2008.

One market participant said Brazil would only be able to produce 500m litres of the biofuel next year.

($1.00 = R1.75)

By: William Lemos
+1 713 525 2653

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly