- Posted by Eduardo Moreno
Soybean processing volumes in Brazil were forecast to hold up until at least the first half of next year despite the blow to the sector following the government’s decision to leave the country’s biodiesel mandate at 10%, trade sources told AgriCensus.
The industry had been expecting an increase in the biodiesel mandate from the current 10% to 13% for January/February and 14% from March, according to the 8 December report.
However, despite this setback, high prices for meal and oil were expected to continue to provide good processing margins, AgriCensus wrote, with strong demand for soybeans looking likely to continue through the first half of 2022.
“While the entire sector took a blow due to the biofuel mixture decision, current forward and spot crush margins do not reflect this setback,” Victor Martins of HedgePoint Global told AgriCensus.
“Looking at forward crush margins, for February, Brazilian plants have a positive gross margin of over US$50/tonne, and looking at March 2022, margins are pretty positive as well, paying the crusher over US$39/tonne.”
In November, for example, the soybean crush in Mato Grosso – the largest soybean producing region in Brazil – increased 15.2% compared to the previous month to 856,990 tonnes, with further increases expected in December.
However, December was traditionally the month when companies carried out maintenance to prepare for the beginning of the new season from January which could limit the increase in crushing volumes, AgriCensus wrote.
“Despite higher prices [for meal and oil], processors are not likely to postpone this to January, when available soybean volumes are bigger than in December,” Monique Kempa, market intelligence manager for Mato Gross agriculture institute IMEA, told AgriCensus.
Although IMEA had provisionally forecast December soybean crushing volumes at 1.3M tonnes, sources told AgriCensus the volume was likely to be around 858,000 tonnes.
However, despite the reduced forecast, it would still be a 21% increase on the previous year if achieved.
It has been reported that some crushers had already stopped in December ahead of the imminent soybean harvest, which was expected to be at a record high this season, with BrazilAgro forecasting that the 2021/22 crop was likely to reach record levels.
Source: Oils & Fats Internacional (OFI)