Brazil's Mines and Energy Ministry is keeping its mandate for 10% biodiesel blending into diesel for July and August, raising frustration among producers that bet on a resumption of the 13% mixture.
In a statement, the Brazilian ministry said it made the decision bearing in mind the interests of consumers.In April, high biodiesel prices during an auction to secure supply for May and June led the government to cut the mandate to 10%, from 13% initially, amid fears of impacts on inflation or even a strike by truckers.
Biodiesel producers expected a return to the 13% blend in July and August, whose public auction is due to occur in early June. In a statement, Brazilian oilseeds crushers association Abiove labeled the government's move as an intervention in the market, while Brazil's biofuels producers association, or Aprobio, said the decision raised uncertainties.
Keeping the 10% blend for July and August follows a hike in prices for soybean oil, the main raw material used for biodiesel production. This year through May 12, the Brazilian soybean oil FOB Paranagua price has increased by 30% to above $1,300/mt, according to S&P Global Platts.
Market participants say the soybean oil supply for exports is likely to rise amid a lower demand for biodiesel purposes. In April, Brazil's soybean oil overseas shipments totaled nearly 300,000 mt, up by 115% year over year.
