Brazilian biodiesel producers warn of shortage risks after regulation change

As of January 1 next year, sales of biodiesel in Brazil will be carried out directly between soy producers and distributors, putting an end to public auctions conducted by the National Oil Agency (ANP) and intermediated by Petrobras since 2005. The decision was already part of a resolution issued last December, but was finally made official last week — and has drawn much irritation from biodiesel manufacturers.

To justify its approval, Brazil’s National Energy Policy Board (CNPE) alleged that the new sales model will “provide more freedom to agents and less state intervention, which is more adherent to the new outlook of the fuels market.”

Representatives of biodiesel producers tried to overturn the rule change but were unsuccessful. Now, producers and distributors have been informed they will have to begin negotiations over sales contracts immediately, as the new regulations will come into force as of December.

For soy producers, the end of auctions makes their sales volumes highly unpredictable. With no way of planning ahead, there is a fear that the sector will face financial instability.

“It’s a completely unpredictable time for...