Soyabean and soya oil imports are now being accepted in Brazil for biodiesel production following a resolution by the country’s national energy council, Biodiesel magazine reported on 24 November.

Published on 18 November by the Brazilian National Energy Policy Council, the resolution did not, however, make it clear how long the policy would remain in force.

The move followed a report filed with the United States Agriculture Department’s (USDA) Global Agricultural Information Network (GAIN), saying that soyabean oil prices in Brazil had been spiralling due to dwindling stocks.

Brazil’s new policy reflected the government’s growing concern over rising consumer inflation, according to the report. Consumer inflation was at 0.94% in October, the highest monthly rate since 1995 and soyabean oil prices were up 22.4% for the month.

The resolution created an exemption to legislation that mandated that all biofuels sold at Brazilian Petroleum, Natural Gas and biofuels agency (ANP) auctions had to be made from locally produced oils and fats.

ANP auctions were the official – and only – channel of biodiesel distribution in Brazil, Biodiesel magazine said. The new exemption permits meant that imported raw materials could now be used in biodiesel auction notices.

The GAIN report explained that ANP auctions allowed the biodiesel industry to keep tight stocks, and produce only the volume of fuel that was to be delivered over the following two months.

In 2019, Brazil had produced 5.9bn litres of biodiesel, Biodiesel magazine said, with soyabean oil accounting for more than 70% of the feedstock used.

The ANP had progressively increased the mandatory blend rate for biodiesel sold domestically in recent years, Biodiesel magazine said, including a 12% mandate put in place in March 2020.

However, since March, the ANP had temporarily lowered the biodiesel blend mandate twice due to a lack of available supplies.

According to the GAIN report, the market was ambivalent on whether the resolution would lead to higher Brazilian imports of soyabeans and soyabean oil.

In the first two days following the resolution, there had been no noticeable impact on prices.

The report explained that soya and soyabean oil prices from traditional suppliers to the Brazilian market were also currently high, and Brazil’s devalued national currency was making imports more expensive.

Prices were expected to come down at the start of 2021, the report said, when Brazil’s soyabean harvest began and stocks were replenished.