10 April 2012 22:29 [Source: ICIS news]
MEDELLIN, Colombia (ICIS)--High-priced soybeans will raise biodiesel prices slightly as drought has lowered yields in the region, said a biodiesel seller in Argentina on Tuesday.
“We will probably see a small price increase due to higher oilseed cost, but the elevated prices will mostly affect the food sector,” said the seller.
Steady supply, paired with weak demand from Europe, is keeping soy methyl ester (SME) biodiesel cheap out of Rosario. Bid/offer positions of SME biodiesel were assessed in the range of $1,144-1,164/tonne (€869-884/tonne) FOB (free on board) Rosario, Argentina.
In its monthly World Ag Supply and Demand Estimates (WASDE) report, the USDA lowered global soybean production based largely on crop trouble in South America.
The USDA, as the market anticipated, cut its estimates for soybean production in both Brazil and Argentina.
Brazil’s soybean harvest was estimated at 66m tonnes, a 2.5m-tonne decrease from the USDA’s March estimate. Argentina’s soybean crop was estimated at 45m tonnes, down 1.5m tonnes from the March estimate.
"Warm temperatures and a lack of rainfall since late February in the southern state of Rio Grande do Sul further reduced yield and production prospects," said USDA. “Argentina and Paraguay soybean production estimates also are further reduced this month, reflecting the damaging effects of this year's drought.”
The southern Brazil states of Rio Grande do Sul and Parana, major soybean production areas, have been affected by a drought that began in late 2011.
Soybeans are a key feedstock for biodiesel. The crop year runs September to September.
The latest cuts due to drought in South America will draw down global soybean stocks by 20%, the lowest level since 2008-2009, said USDA.
The Brazilian government issued a forecast on Tuesday, estimating the crop at 65.6m tonnes, down 3.2m tonnes from its March forecast.
Brazil is the world's largest soybean exporter.
($1 = €0.76)
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