Dec 18, 2024
More Soy Oil to be Used Domestically in Brazil, Less for Export
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The soybean crushing capacity in Brazil over the next three years is expected to increase at nearly twice the rate of the last three years according to Itau BBA's Agro Consulting.
Itau BBA is tracking 13 new projects that will add 37,000 tons/day to Brazil's crushing capacity between 2025 and 2027, through new plants and expansions. This will add an additional crushing capacity of 11.1 million tons per year. The total value of the investments is estimated at R$ 11.3 billion (approximately $1.88 billion).
The installed crushing capacity of soybeans in Brazil is expected to increase from 59.4 million tons in 2024 to 72.1 million tons in 2027. Historically, 92% of the crushing capacity is utilized on an annual basis. Therefore, soybean crushing will go from 54.5 million tons in 2024 to 66.3 million tons in 2027, representing an annual growth of 6.8%.
In recent years, the vegetable oil industry has seen a significant increase in the volume of crushed soybeans due to an increase in the use of biodiesel in Brazil driven by the new "Fuel of the Future Law."
The "Fuel of the Future" law in Brazil will continue to increase the demand for soybean oil for biodiesel. Currently, biodiesel contains 14% vegetable oil (B14) with soybean oil being the primary feed stock. The mixture is expected to reach 15% (B15) in March 2025, 16% (B16) in March 2026 and 17% (B17) in March 2027. Eventually, the mixture is expected to reach 25% (B25) although these increases need to be ratified annually by the National Energy Policy Council (CNPE).
Biodiesel consumption in Brazil is expected to grow from 9.3 billion liters in 2024 to 12.3 billion liters in 2027, an annual increase of 9.7%. The demand for soybean oil for biodiesel production should jump from 5.9 million tons in 2024 to 7.9 million tons in 2027, an increase of 34%.
With this growth in biodiesel consumption, soybean oil exports are expected to remain at low levels, around 1 million tons annually, below the 1.8 million tons average for the last five harvests.