RIO DE JANEIRO, BRAZIL – Argentina’s soybean oil exports will likely increase, driving down international prices for the product, due to a new law in the country that reduces the volume of soy-based biodiesel that is blended with regular diesel sold locally, industry officials said Monday (19)
Lawmakers in Argentina, the world’s largest exporter of soybean oil, last week approved a measure allowing a reduction in the amount of soy-based biofuel to be blended into diesel for domestic consumption.
The measure, backed by President Alberto Fernández, is expected to be sanctioned before the end of the month.
“Reducing the volume of biodiesel used in fuels locally will decrease consumption of soybean oil in Argentina. Then we will have more soybean oil to be exported. This can impact international prices, considering the large share of the international market that Argentina has,” said Gustavo Idígoras, head of the CIARA-CEC agro exporters chamber.
Argentina shipped 5.36 million tons of soybean oil last year, according to government data. India was the main buyer, receiving 53.4% of sales. China and Bangladesh came next, with 7.8% and 7.6% of the total, respectively.
The new law, which aims to ensure the sustainable use of biofuels in diesel and gasoline, was approved by the Senate on Friday after also passing through the Chamber of Deputies.
The measure provides for minimum use of biodiesel of 5% – which may drop to 3% in diesel sold to the population, down from 10% previously.
“Reducing the blend in Argentina means increasing soy oil exports,” said Luis Zubizarreta, president of the biofuels industry chamber Carbio. He pointed out that this could put pressure on Argentine soybean oil prices.
With the 10% blend, Argentina used to consume about 1 million tons of biodiesel per year to be mixed with diesel. With the new measure, this volume should be reduced by half, said Zubizarreta.