Low Water Levels in Paraná River Drive Up Soyoil and Biodiesel Prices in Brazil

Palm Oil Magazine
Low Water Levels in Paraná River Drive Up Soyoil and Biodiesel Prices in Brazil. Photo by: Pexel

PALMOILMAGAZINE, BUENOS AIRES – The declining water levels in the upstream sector of the Paraná River, Argentina, due to the dry season, have disrupted water transportation and led to increased prices for soyoil and biodiesel in Brazil. This has significantly impacted the vegetable oil supply chain in the region and affected international trade.

On September 20, the depth of the Paraná River at San Lorenzo, Argentina, a key hub for soyoil transportation, dropped to 9.44 meters, the lowest level since January 2023, according to data from maritime agencies T&T and Antares. This forced palm oil traders to reduce the capacity of tanker ships docking at Argentine ports by 5-12.5%, according to market sources in Argentina.

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To illustrate, if tanker ships reduce their capacity by 12.5%, they can only transport around 28,000 metric tons (mt) of soyoil, down from the usual 32,000 mt. This shortage has led Brazilian traders to seek additional volumes to fulfill export demands.

Also Read: Assessing the Influence of Drought on Palm Oil Production

As quoted by Palmoilmagazine.com from Reuters on September 29, the price gap at the Chicago Board of Trade (CBOT) was evident at the Port of Paranaguá, Brazil. The premium price of soyoil for October delivery increased to 8 cents per pound over the contract price at the same board, compared to 1.8 cents per pound earlier in the week.

On 25 September, the price negotiation was about 2,5 – 5,5 cent/pound to the soyoil exchange contract for October that was equal to the price at $ 1.034 to $ 1.100 per ton FOB Paranagua. For the comparison, last week, the indicator of FOB Pranagua that was published by Argus was closed at about $ 934 to $ 1.009 per ton.

Soyoil demands in Brazil got increased. It happened for the increasing biodiesel mixture mandate from 12% to be 14% in March 2024. The increasing demands in the country minimize the export competition in the country and soyoil delivery to the port.

Brazil vegetable oil industrial association, Abiove predicted that soyoil export in 2024 could be reaching 1,15 million tons, or almost half numbers of the 2023 export volume. (P2)

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