Brazil’s government on April 9 reduced the official mandate of biodiesel blend into diesel oil for the next two months to 10%, from the 13% level initially established according to the national biofuels policy.
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The cut was already expected by market participants given the high prices seen earlier this week during an auction to secure biodiesel supply for May and June. Such high values could have an effect on the inflation rate, something the government is concerned about.
In Brazil, biodiesel is made mainly from soybean oil, but despite a larger harvest in the current season, “the global market remains with strong demand for soybeans, mainly because of low inventories of the commodity in the US and rising demand in China,” Brazil’s ministries of Agriculture and Mining and Energy said April 9.
Brazil is the top global producer of soybeans.