Argentina’s biodiesel production is projected to rise nearly 8 per cent to about 1.2 billion litres in 2026, with stronger domestic demand expected to more than offset a decline in exports, according to a report by the US Department of Agriculture (USDA), Oil & Fats International reported.
The increase in domestic demand is expected despite total diesel consumption remaining broadly unchanged. Biodiesel demand is projected to rise by around 160 million litres, supported by stricter enforcement of the blending requirement after official biodiesel prices were updated, along with higher sales in the domestic market beyond the mandatory blend, the USDA said in its Argentina: Biofuels Annual report.
At the time of the report on August 20, the Argentine government was considering proposals to increase the biodiesel blending requirement to 10 per cent. However, the issue remained politically sensitive, according to the USDA.
Biodiesel exports are forecast to fall by around 26 per cent from the previous year to 230 million litres, which would be the lowest level since 2027, the report said. Shipments were slow during the first half of 2026 because of uncertainty over European Union (EU) regulations and weak import demand.
The USDA said the European Parliament’s vote in early July confirmed that soyabean-based biodiesel would continue to qualify under the EU’s renewable energy framework. The decision reduced the immediate risk to Argentine exports, although uncertainty remained because the European Commission could still propose new laws or introduce additional regulatory measures.
Argentina’s export volumes will depend largely on demand and prices in the EU, while continued volatility in global energy markets is adding uncertainty to the outlook, the USDA said.
The Netherlands has remained the main destination for Argentine biodiesel, with imports arriving through the Port of Rotterdam before being distributed to other European markets. Belgium plays a similar, though smaller, role through the Port of Antwerp.
The United States, once Argentina’s largest biodiesel export market with shipments worth about US$1.2 billion in 2016, has remained effectively closed to Argentine biodiesel since mid-2017.
Following the closure of two small plants in 2025, Argentina had 30 biodiesel plants operating in 2026, with combined production capacity of 4.38 billion litres. Total capacity has remained almost unchanged since 2020.
Despite the expected increase in production, the industry is expected to continue operating well below its full capacity. Around 73 per cent of installed capacity is projected to remain unused in 2026, compared with an average of 50 per cent between 2017 and 2022, the USDA said. No major investments in new biodiesel production capacity had been announced as of the report.
Soyabean oil remains the main raw material for Argentina’s biodiesel industry. Large integrated exporters supply much of the feedstock through their soyabean crushing operations, which produce soyabean meal and oil and, when market conditions are favourable, biodiesel. Medium and small biodiesel producers generally purchase soyabean oil from these larger processors.
The USDA said feedstock availability was abundant because Argentina is one of the world’s largest soyabean producers and a major exporter of soyabean meal and oil. The country’s 2025-26 soyabean harvest had recently ended at 50 million tonnes.
The biodiesel industry is expected to use about 1.06 million tonnes of soyabean oil in 2026 for domestic consumption and export production.
Argentina is also beginning to develop advanced biofuels, although production remains limited. The state-owned oil company, which supplies more than half of the domestic fuel market, and a private Argentine company operating two medium-sized biodiesel plants have announced a US$400 million investment to convert an idle refinery near Rosario into a biorefinery.
The planned facility would produce fuels that can be used directly in existing engines, including sustainable aviation fuel (SAF) and hydrogenation-derived renewable diesel (HDRD). The USDA said the project could create a significant new market for Argentina’s oilseed processing industry, which currently has substantial unused capacity.
Details about the planned facility’s production capacity, start-up date and feedstock mix have not been released. However, industry sources expect most of its output to be exported, according to the USDA.
Several companies are also promoting canola, carinata, also known as Ethiopian mustard, and camelina as raw materials for advanced biofuels in Argentina.
The USDA said these crops offer sustainability benefits because they are mainly grown for fuel rather than food and can be included in existing crop rotations. Although their planted area has been expanding rapidly, they remain small compared with Argentina’s overall oilseed sector.
Around 200,000 hectares were planted with these crops in 2025-26, with canola accounting for the largest share. Industry sources expect the area to expand rapidly in coming years because these winter crops can be grown alongside Argentina’s main summer soyabean and corn crops without competing for land.
