Vegetable oil use in biodiesel is projected to reach 34.3 million tonnes in Thailand, Brazil and the United States, a 122% increase from 2020. Including the European Union, where consumption is holding at 6 million tonnes a year, the total would be 40.3 million tonnes.
Geopolitical conflicts and uncertainty over oil prices and supply have driven greater demand for vegetable oils blended with diesel. Biodiesel use has grown for two decades, initially in part to pursue cleaner energy. More recently, concerns about oil supply after the war in Iran have led several governments to raise biodiesel blends as a measure of energy security.
Indonesia has used a 50% palm-oil blend in diesel since July and is expected to consume 17.4 million tonnes of palm oil next year, up from 7.2 million tonnes in 2020. Malaysia has raised its blend to as much as 20%, while Thailand’s blend is also 20%, though optional.
In Brazil, soybean oil consumption could rise from 4.2 million tonnes to 8.7 million tonnes if the country implements a B16 blend in March. In the United States, consumption is projected to increase from 5 million to 8.1 million tonnes amid recent changes to the energy system.
Higher blending rates support vegetable-oil producers by increasing demand, and the trend is also bolstering soybean production. Over the past 15 years, soybean oil use for biodiesel has increased 913% in the United States and 383% in Brazil. For countries such as India, however, greater demand adds pressure to domestic supplies; the country imports close to 16 million tonnes of vegetable oils a year for food.
Global soybean production is projected to reach 443 million tonnes in the 2026/27 season, compared with 261 million tonnes in 2010/11, according to the US Department of Agriculture. Brazil’s crop is forecast to rise from 75 million tonnes in 2011 to 182 million tonnes in 2026/27, according to Conab, the country’s national food supply company.
Worldwide vegetable-oil production has reached 243 million tonnes. Palm oil accounts for 79 million tonnes and soybean oil for 75 million, followed by canola at 38 million and sunflower oil at 24 million.
The increased use of vegetable oils for fuel has coincided with higher consumer prices. Since 2020, soybean oil prices have risen 145%, compared with average food inflation of 73%, according to Brazil’s Fipe economic research foundation. The period also saw crop failures, falling global stocks, stronger demand for soybeans and faster increases in international prices.
Sources: Folha Mercado.