Brazil to restore biodiesel blend to 13pc: minister

Brazil will restore its biodiesel mandate to 13pc in September after the government temporarily cut the blend to 10pc in May in a bid to curb prices, agriculture minister Tereza Cristina Correa told investors yesterday.

In April, hydrocarbons regulator ANP reduced the blend from 13pc to 10pc in a procurement tender for May and June supply. The government maintained the lower blend for next week's auction for July and August supply.

The blend should be increased to 13pc in the August auction to supply the market in September and October, underpinned by a record soybean harvest, Correa said.

The move came as transport prices, which make up 20pc of CPI inflation, reached 11.5pc in the 12-month period ending in April. Rising energy prices are expected to push 12-month inflation to above 8pc at the end of this month.

Correa reaffirmed plans to boost the blend by one percentage point to 14pc in 2022 and to 15pc in 2023. Despite her support to restore the blend, the final decision will be made by the mines and energy ministry.

Brazilian biodiesel and oilseed producers had slammed the government's decision to lower the blend, asserting that price should not determine the blend rate.

"On several occasions, the biodiesel price has been below diesel prices, and the blend did not increase," said Erasmo Battistella, president of the Brazilian biodiesel producers' association Aprobio, this week.

He said the sector is negotiating with the government to guarantee that the blend returns to 13pc during the final four months of the year.

According to Battistella, soymeal supply declined because of the lower blend, pushing up feed prices for the poultry and pork industries.

The biodiesel sector is investing in new production plants to prepare for future blend increases, and if the government does not maintain this schedule, it will be creating legal uncertainty for these investments, Battistella warned.