15/12/2021 (www.spglobal.com) - The Brazilian soybean crushing volume in 2022 is unlikely to slacken despite the National Energy Policy Council's decision to cut next year's biofuel content level in diesel from 13% (B13) to 10% (B10), analysts told S&P Global Platts. While some in the biofuel industry said the scaling down of vegetable oil-based biodiesel blend from B13 to B10 in 2022 will reduce soybean crush by more than 3 million mt year on the year, S&P Global Platts Analytics does not see any noticeable impact from the directive. "B10 mandate is expected to have very little or even no impact on soybean crushing in Brazil," said Pete Meyer, head of grain and oilseed analytics at S&P Global Platts. Brazil was largely at B10 level in the marketing year 2020-21 (October-September) and crushed 46.75 million mt, Pete said. In 2021-22, crush is forecast about 1 million mt higher at 47.7 million mt, he said. Even if the Brazilian soybean crush reverts to last year's level and gets pared by 1 million mt in 2021-22, soybean oil exports can go up by the equivalent volume of 1 million mt, according to Platts Analytics. Echoing Platts Analytics viewpoint, Daniele Siqueira, an analyst at consultancy AgRural, said, "although some major biodiesel producing states could feel the pinch, we don't expect a significant annual change in the soybean crush due to the B10 mandate." "Having said that, we think B10 for 2022 is a mistake [from the government], because with that we're going backwards and disrupting a very successful biodiesel program in terms of investment, growth and environment," AgRural said. The government has abruptly reversed the biofuel blending decree, saying higher biodiesel usage props up the inflation level, which is not exactly true, Siqueira said. "That's just wrong," she said. Much to the dismay of Brazilian biodiesel producers, the government announced Nov. 29 that it will maintain a B10 biodiesel blend for all of 2022. "The decision taken this Monday [Nov. 29] is in line with the interests of society, reconciling measures to contain the price of diesel with the maintenance of the National Biofuels Policy, providing predictability, transparency, legal and regulatory security to the sector," stated the Ministry of Mines and Energy release. This is a big turnaround from the country's previous plan of B14 implementation by March 2022 and B15 by March 2023. To accommodate a higher biofuel mandate in the coming years, soybean oil processors had made huge investments in capacity expansion, market sources said. But now they are probably staring at underutilization of the resources. The biodiesel sector has invested in production capacity expansion, based on the projected mandates for the next years, and have the capacity to supply much more than the B10, AgRural said. In a joint statement, the Brazilian Association of Vegetable Oil Industries, the Association of Biofuel Producers in Brazil and the Brazilian Union of Biodiesel and Biokerosene cautioned against the B10 mandate and said it dealt a mortal blow to the stability of the biodiesel sector, negating the investments already made and rejecting future investments in the biofuel industry, with direct impact on the elimination of green jobs and economic development of the country. Biodiesel blending directive was first introduced in Brazil in 2008. Since then, the blending requirement has surged steadily from 2% (B2) to 13% (B13) in 2021. Brazilian biodiesel production remains tightly regulated by the government. In an attempt to control biodiesel prices, which drastically increased due to high prices of soybeans -- the major biodiesel feedstock -- the government has reduced the blending requirement in diesel from B14 to B10. Soybeans prices have escalated since 2020 amid strong demand for the product, especially from China, imbalances between world supply and demand, and the strong devaluation of the real, the US Department of Agriculture said. According to Brazil's Petroleum, Natural Gas and Biofuels National Agency, soybean oil accounts for 75% of total biodiesel production in the country, while other vegetable oils and animal fats account for the remaining 25%. Brazil is forecast to crush 47.7 million mt of soybeans in 2021-22, up 2% year on year, and soybean oil production is projected at 9.18 million mt, up 2% on the year, the USDA's latest World Agricultural Supply and Demand Estimates said. Brazil remains the world's third largest biodiesel producer, following Indonesia and the US. Total Brazilian biodiesel production in 2021 is estimated at 6.9 billion liters, a slight increase of 400 million liters vis-a-vis 2020, the USDA's Foreign Agricultural Service report said.