SÃO PAULO, BRAZIL — Brazil’s soybean and soy oil exports potentially could see a small decline as domestic demand grows up to 5 million tonnes for the oilseed following a decision to increase the blend of biodiesel into diesel fuel starting in March 2024, Reuters reported, citing industry analysts.

Pedro Schicchi, grains and oilseeds analyst at hEDGEpoint Global Markets, told Reuters that he sees a reduction in soy oil exports of 800,000 to 1 million tonnes, leaving a domestic soy oil demand of 200,000 to 400,000 tonnes greater than in 2023.

Some 70% of Brazil’s biodiesel comes from soybeans after it is processed into soy oil. Brazil’s government last week boosted the mandatory biodiesel mix to 14% from a current 12%. Brazilian soy processors would be expected to crush between 1 million and 2 million tonnes more soybeans in 2024 to cater to additional biodiesel demand, Schicchi said.

The analyst noted that disregarding existing stocks, Brazil’s exportable soybean surplus could be about 2 million tonnes lower than this year’s. Based on oilseed crushers’ estimates, Brazil would then export just over 99 million tonnes of soybeans in 2024, below a record of about 101 million projected for 2023.

Major fluctuations have not yet been seen in the basis for soybean oil, according to Jose Gomes, a senior grains and oilseed analyst at S&P, but traders do see support in FOB Paranagua port premiums for shipments from the second quarter forward, as the trend is for a reduction in Brazilian soy oil destined for export.