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Biodiesel production reaches record level worldwide

According to data from the International Grain Council (IGC) reported by Germany’s Union for the Promotion of Plants and Protein (UFOP), global biodiesel production has achieved a record level. The rise in production was primarily fueled by increased soybean cultivation in the USA and South America, as indicated in the report dated June 6.

The IGC estimates that global biodiesel production, including hydrotreated vegetable oil (HVO), reached a new peak of 71.5 million tonnes in 2023, an 11% increase from the previous year. This growth was mainly concentrated in North and South America, as well as Asia.

Despite minimal changes in production within the EU-27 compared to the previous year, the European bloc maintained its position as the leading global producer. Global production for 2024 is projected to rise to 76.3 million tonnes, marking a 7% increase from the previous year’s output.

Over recent years, the USA, Brazil, and Indonesia have expanded their biodiesel production, collectively accounting for nearly 60% of global production, up from 35% a decade earlier. Since 2020, biodiesel and HVO production in the USA has nearly doubled to just under 20 million tonnes, with expectations of reaching 21 million tonnes by 2024.

Soybean oil plays a crucial role as a feedstock in North and South America, according to the report. However, it’s soybean meal, with its 80% protein content and approximately €420 (US$451) per tonne cost, that has been the primary economic driver behind the production surge, rather than soybean oil, which trades at around €935 (US$1,004) per tonne in Germany.

The report notes a continuous increase in soybean oil supply due to expanding soybean meal production, leading to a significant rise in global industrial demand. This demand is expected to reach a record level of 6.4 million tonnes in 2024/25, compared to 5.9 million tonnes the previous year.

While there’s been an expansion in planted areas to meet the higher demand for soybean meal, soybean oil consumption in the food sector has remained relatively stable, according to Agrarmarkt Informations-Gesellschaft’s research.

In terms of exports, US soybean meal exports could increase to a record 15.7 million tonnes in 2024/25 from 14.3 million tonnes in 2023/24, despite rising domestic consumption limiting export potential.

In Brazil, substantial harvests are anticipated to meet both domestic demand and exports, following a 2% increase in the blending quota to B14 (14% biodiesel). This adjustment is expected to boost domestic consumption by heavy goods vehicles (HGVs).

Unlike Argentina, which recorded its smallest harvest in over two decades, Brazil is not a leading exporter of biodiesel on the global market due to increased domestic consumption following the quota adjustment.

Despite its reduced harvest, Argentina remains the largest exporter of soybean meal and consequently soybean oil as well in 2022/23. Forecasts suggest that Argentine exports of soybean products will increase in 2023/24 and 2024/25 due to expectations of larger harvests.

The report highlights that exports of soybean products are vital for Argentina’s foreign currency earnings.

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