Soybean processing volumes in South American countries are likely to increase steadily in 2024 thanks to the recovery of oilseed production in Argentina and an increase in the biodiesel fuel mandate in Brazil, according to S&P Global Platts .
According to estimates by S&P Global Commodity Insights, total soybean processing in Argentina and Brazil next year will reach approximately 92.1 million tons in 2024, a 15.3% increase from 2023, when Argentina’s harvest was roughly halved due to the largest drought in the country’s history. Against this background, in 2023, Argentina ceded its leading position in soybean meal production to Brazil.
In the 2023/24 season (April-March), experts at S&P Global forecast a soybean harvest in Argentina at the level of 50.5 million tons, which is more than twice as much as compared to 22 million tons in the previous MR.
Brazil is expected to introduce a mandatory blend of biodiesel in diesel fuel, which is currently 12%, and is set to increase to 14% in March, as determined by the country’s National Energy Policy Council (CNPE). Previously, it was planned to increase the mandate to 13% from April 2024.
According to market calculations, each percentage point increase in the mandate means an additional demand of approximately 650,000 cubic meters of biodiesel per year to meet regulatory requirements. This should boost domestic consumption of soybean oil, as it accounts for more than 70% of the feedstock used in Brazil’s biodiesel industry.
Brazil is expected to use 5.74 million tonnes of soybean oil for biodiesel production in FY 2023/24 (January-December), up 24.6% from last year, according to S&P Global’s latest forecasts. Brazil’s 2023/24 FY soybean crop is also expected to be 158 million tonnes, down from an initial forecast of 167 million tonnes due to a lack of rain in key production regions from October to early December.
It is also worth noting that the market is expecting an increase in purchases of soybean oil by major consumers such as India and China, which will also increase the processing of the South American oil refinery.