Sao Paulo: Brazil may soon raise its mandatory biodiesel blend in diesel fuel to 15%, up from the current 14%, following a drop in vegetable oil prices, according to Daniel Amaral, Director of Economics and Regulatory Affairs at oilseed industry group Abiove, reports Investing.com.
Earlier this year, Brazil’s national energy council decided to pause a planned increase in the blend due to concerns that it could drive up food prices. With inflation already a key issue, the government feared the change could affect public perception and further dent President Luiz Inacio Lula da Silva’s declining approval ratings. Inflation stood at 5.48% for the 12 months through March, well above the central bank’s 3% target.
Now, the situation has shifted. “With vegetable oil prices falling again, the conditions are right for the government to move forward with the blend increase,” Amaral said during an event in São Paulo. He pointed to improved global supply and demand for vegetable oils as a key factor behind the price drop.
“The industry has the capacity, we’re increasing crushing operations, everything is ready,” he said. “It’s now up to the government, and we hope the decision comes soon.”
The Ministry of Mines and Energy did not respond to a request for comment outside regular business hours.
Amaral noted that the rise in vegetable oil prices last year was mainly driven by external factors, including currency fluctuations and palm oil harvest issues in Southeast Asia. “These were not domestic problems,” he said, defending the industry’s long-held position that raising the biodiesel blend would not necessarily increase consumer prices.
After the government delayed the increase, agribusiness consultancy StoneX halved its forecast for biodiesel sales growth in 2024—from 1.2 million to 600,000 cubic meters.
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