MercoPress. South Atlantic News Agency

Brazil temporarily lowers biodiesel content of diesel, given the strong demand from harvest time

Brazil once again is expecting record oilseed and sugarcane harvests. Diesel powers the tractors in the fields as well as the trucks and trains that ship the harvest

Brazil's National Petroleum Agency, ANP, temporarily reduced the volume of biodiesel blended with diesel sold at the pump to 10% from 12% for the next five days in an emergency move, the country's lead regulator for the oil and natural gas industry said Tuesday.

“The measure is necessary to provide continuity to national fuel supplies given that biodiesel deliveries projected for the cited period may not be sufficient to meet the 12% Diesel B blend, which is being heavily consumed, despite the actual pandemic,” ANP said in a statement.

Brazil raised the volume of biodiesel blended with diesel sold at the pump to 12% from 11% on March 1. The increase was part of a broader plan under the government's RenovaBio biofuels program to boost the biodiesel-diesel blend to 15% by March 2023, with the rises implemented in annual 1-percentage-point increases.

The move underscored Brazil's ongoing battle against the coronavirus despite the country's early resilience to the pandemic's global spread. Brazil started to reopen in recent weeks after implementing social-distancing measures in mid-March, despite a rising infection rate and death toll that have made Brazil the second-hardest-hit country after the US, with more than 44,000 dead.

Diesel consumption remained surprisingly resilient in the March-April period because it coincided with the start of the harvest season, with Brazil once again expecting record oilseed and sugarcane harvests. Diesel powers the tractors in the fields as well as the trucks and trains that ship the harvest to ports for export, so demand rises and follows with the agricultural season.

In addition, much of Brazil's products are transported via truck.

Biodiesel producers, however, were affected by the pandemic and social-distancing measures despite the relatively rural nature of the work. The ANP, meanwhile, was forced to temporarily stop biodiesel auctions because of social-distancing measures.

The measure, which will be in place until June 22, will likely be temporary after the ANP's 73rd biodiesel sale set a fresh record for sales volumes. The auction, which was for biodiesel delivered in July and August, featured the sale of 1.189 billion liters of biodiesel at an average price of Real 3.357 (65 US cents)/l, the ANP said. That was up from the 72nd biodiesel auction held in April, which sold 1.021 billion liters at an average price of Real 2.713/l for delivery in May and June.

The 72nd biodiesel auction, however, was adjusted with an eye toward greater demand destruction, which led to concerns about biodiesel supplies in recent weeks amid a better-than-expected rebound in diesel consumption. The changes included a reduction in the minimum volumes distributors were required to take in case of a crash in demand.