Argentina biodiesel producers in pause mode
"It will be difficult to deliver the (blending) mandate in December because of a lack of oil," said Carlos Paredes, head of the Cepreb chamber that comprises small and medium-sized biodiesel producers. Argentina currently requires a 10pc biodiesel blend in the domestic market.
Paredes, chief executive of Aripar, which operates a 50,000 t/yr biodiesel plant in Buenos Aires province, says he has already advanced employee vacations in anticipation of stopping production.
The country's small and medium-sized producers supply around 80pc of the domestic market for the soybean-based biofuel while the larger producers have tended to focus on the more lucrative export market. Large, integrated export-oriented producers such as Bunge and Cargill do not suffer from the same problems in obtaining the raw material as their smaller independent counterparts.
For now, producers of soybean oil, which is the main raw material in the locally produced biodiesel, have largely halted sales. Those that continue selling product are doing so on the condition that the buyer will reimburse the difference if and when export duties decrease.
And that is for those that still have product available. Many of the oilseed crushing plants do not have anything to sell as farmers are also hoarding their soybeans in anticipation of improved market conditions and a potentially sharp currency devaluation that would make exports more competitive.
The amount of grains and oilseeds sold abroad in the week ending 20 November brought in $108.8mn, a sharp decline from the $388.6mn seen in the same week last year. The trend is hardly new. From 1 January until 20 November, a total of $17.8bn was sold abroad, compared to $22bn in the same period last year, according to the latest industry figures.
Macri, who won a presidential run-off election on 22 November, has vowed to decrease export duties on soybeans by five percentage points, while eliminating them for wheat and corn. Soybeans currently pay export duties of 35pc, while soybean oil pays 32pc. Although Macri has not detailed by how much export duties for soybean oil will decrease, industry participants are expecting five points as well.
The president-elect has not specified when these reduced duties would take effect. But he rejected speculation this week that he was considering opening a 90-day window of duty-free soybean exports in order to quickly replenish Central Bank hard currency reserves.
Biodiesel production declined 28pc in the first nine months of the year to 1.3mn t, compared to 1.9mn t in the same period of 2014, according to energy secretariat figures.
Biodiesel exports declined 54pc in the January-September period to 496,955 t, compared to 1.1mn t in the first nine months of last year. Sales of the biofuel abroad have fallen throughout the year as the sector struggles with lower oil prices and the 2013 closure of European markets.
Earlier this month, Argentina slashed its biodiesel export duty by more than 60pc to 3.31pc in October, a decrease from 8.6pc in September. The retroactive manner in which the duty was adjusted highlights complaints from the biofuels sector, which is optimistic the process may change under a Macri presidency.
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