The Brazilian government has raised the country’s mandatory biodiesel blend rate from 10% to 12% in a bid to control fuel inflation amid high soyabean prices, Reuters reported on 13 July.

However, the increase had fallen below this year’s target of 13%, the report said.

About 70% of Brazil’s biodiesel was produced from soyabean oil and prices had been rising due to strong demand and tight supply of soyabeans, Reuters wrote.

“The Brazilian biodiesel industry is entirely prepared for delivering the 13% mixture,” Daniel Amaral, chief economist at Brazilian oilseeds lobby Abiove, was quoted as saying in a 13 July statement.

“Yet raising the blend to 12% is already a positive development as it stimulates soya processing and grain use in Brazil.”

According to a 12 July statement from the Mines and Energy Ministry, Brazil's National Energy Policy Council (CNPE) had decided to raise the blend to 12% “to avoid an excessive increase” in the price of diesel for consumers, Reuters wrote.

The government had cut its biodiesel blending requirement from 13% to 10% in April to keep fuel prices down, the report said, with Abiove then pushing the government to raise its biodiesel blending requirement.

Abiove said that sluggish economic growth had caused biodiesel prices to fall in Brazil, which justified an increase in the mandatory biodiesel mix, according to Reuters.

Keeping the biodiesel mix at 10% would discourage Brazilian farmers to plant soyabeans next season, Abiove reportedly said.