Brazil's soy oil exports climbed 47% through April as delayed biodiesel policy changes increased cheap overseas supplies, according to a Bloomberg analysis on Tuesday.
A record soybean harvest and heavy crushing activity boosted soy oil production across Brazil, while slower domestic biofuel demand pushed more supplies into export markets, the analysis said.
Chicago soy oil futures have rallied nearly 56% this year, although prices at Brazil's Paranagua port have lagged, widening discounts to the lowest levels since 2023, the analysis said, citing data from Commodity3.
Lower prices helped lift Brazil's soy oil exports to the second-highest level in nearly 20 years.
Brazil still blends 15% biodiesel into diesel fuel after authorities postponed a planned increase to 16% while additional technical testing continues.
Strong soybean supplies kept crushing plants operating at high levels as exporters increased vegetable oil shipments to India, Bangladesh, and North Africa, according to the analysis.
Joao Paes de Almeida, founder of advisory firm J.Pacta, said abundant soybean supplies will likely keep Brazilian soy oil prices below Chicago benchmarks unless the country raises biodiesel blending mandates.
The report said Argentina has also faced unusually large soy oil discounts as record South American soybean supplies continue weighing on regional vegetable oil prices.