Brazil's National Energy Policy Council said Nov. 18 that imported raw materials can be used in the production of biodiesel.
Previously, all biofuel sold at National Petroleum Agency auctions had to be manufactured from oils and fats of Brazilian origin.
On Nov. 12, the National Petroleum Agency (ANP) published the notice for the 77th Biodiesel Auction -- biofuel that will be used in the first two months of 2021. In that document, the ANP said the government was analyzing the possibility of allowing imported raw materials in biodiesel production.
Since then, FOB soybean oil market participants in South America have been looking for any developments, with talk about the possible impacts on prices in Brazil and in Argentina.
FOB Paranagua soybean oil prices rose at the beginning of October in the Brazilian market, with stocks of the product at long-term lows.
According to estimates by Abiove -- the Brazilian Association of Vegetable Oils -- and market talk, soybean stocks and soybean oil stocks are the lowest in Brazil in the past two decades, support prices for exports and in the domestic market.
Some market participants said the new measure will benefit the biodiesel industry and lead to lower soybean oil prices in the near future, with the increase of internal product offer and the approach of the new soybean harvest season in Brazil.
Others said the move will have little effect on soybean oil markets in general.
One concern was related to the extent of the resolution, since the official note did not give a period during imported material may be used in biodiesel production.
