(Photo: Aerial view of the Cofco soybean crushing pole at Timbúes, Santa Fe Province)

Buenos Aires, July 17th. According to the RIA Consultores weekly report, and based on official statistics from Energy secretariat, biodiesel production between January and May reached 924K tons versus 1,10 million metric tons last year. The explanation is based on the weak export business at the beginning of the year, mostly due to the close of the US market. In fact, exports during the first five months of the year reached 416K tons versus 623K tons Jan-May 2018. Netherlands and Malta represent close to 100% of this year exports.

“The European Union imposed a 1.2 MMT quota model to import biodiesel from Argentina, based on a floor price that importers must pay. The problem is that when biodiesel prices go down, as the “floor price” is calculated over a three months ago prices basis, local exporters go out of the market”, Claudio Molina, a senior biofuels analyst told to eFarmNewsAr.com.

With the European Union restricted market as the only one open for the biodiesel industry, it is expected that exports will not surpass 1.2 MMT this year.

In this context, most of the major biodiesel producers in Argentina are down its activity. With the exemption of Chinese Cofco company, all of rest is producing below 2018, from 22% to 34%. In the following chart, by RIA Consultores, we can see that Louis Dreyfus Company leads the producers ranking, but declining it 32% into respect 2018. The second place is T6, a joint venture between Bunge and domestic Aceitera General Deheza (AGD), while Renova, a JV between global Glencore and local Vicentin occupies the third place, downing 34%

Mr. Molina suggests that next year, the biodiesel industry should renegotiate the price formula with the EU. “Nobody knows what is the floor price for Argentine biodiesel. Not even in the official register, this price was published. This brings a high level of uncertainty about future exports to that market”.