Biofuel mandates redraw the soybean oil map in South America in Commodity News 05/01/2026 South America’s soybean oil markets are being pulled in different directions heading into 2026. In Brazil, domestic policy—led by higher biodiesel blending mandates—is increasingly absorbing supply and reshaping trade flows. In Argentina, prices remain anchored to international demand, with South Asia continuing to set the tone. These contrasting dynamics emerge as policymakers across key vegetable oil-producing countries weigh more aggressive biofuel mandates. Indonesia’s proposed B50 program, alongside Brazil’s planned move to B16, could alter global supply and demand balances, with ripple effects across the SBO complex. Brazil: Policy-driven demand reshapes flow Brazil’s SBO market enters 2026 on the back of strong crushing activity. Throughout the 2024-25 cycle, monthly levels constantly exceeded those of the previous harvest. S&P Global Energy CERA estimates that the season will conclude with a record-high crush, with another increase projected for the 2025-26 season. The record soybean production supporting this expansion was driven by two key factors: Brazil’s growing role as China’s primary supplier amid shifting US-China trade dynamics, and stronger domestic demand from the biodiesel sector following the increase in the blending mandate to 15%. In 2025, domestic soybean oil negotiations outperformed exports, according to market participants. After the blend rose to 15% from 14% Aug. 1, domestic deals were increasingly priced at a premium to FOB export values. Traders broadly agree this shift has been the main driver behind the sharp fall in exports since August, with November marking the lowest export volume of the year and the weakest November since 2020. Rising domestic prices have also encouraged biodiesel producers to diversify feedstocks. When the US, Brazil’s primary beef tallow exporter, imposed an additional 40% tariff on all Brazilian imports starting Aug. 7, the domestic market quickly absorbed it at a discount to soybean oil. Data from the National Agency of Petroleum, Natural Gas, and Biofuels showed that the share of soybean oil in biodiesel declined after the tariffs took effect. Looking ahead, market participants warn that if US tariffs are lifted and beef tallow exports return to earlier levels, soybean oil prices could face renewed support in 2026. Brazil is currently between harvests, and biodiesel producers hold comfortable inventories, allowing export prices to regain some competitiveness. Sources caution, however, that this appears to be a seasonal reprieve rather than a structural shift — especially with the B16 mandate penciled in for 2026. “The 2026 outlook heavily depends on when B16 will be implemented,” a Brazil-based trader said. Although it is planned for March, the government has already signaled it may struggle to meet the RenovaBio timeline. “B16 requires very strong crushing rates, and the big concern is the volume of soybean meal that would hit the market,” the trader added, noting that meal oversupply could pressure margins. In 2025, soybean meal prices remained under pressure for most of the year, driven by the record-high crushing activity as strong demand for soybean oil increased processing volumes and, consequently, the supply of meal. Brazilian meal processors are entering 2026 with historically low inventories, facing challenges in securing raw materials for the first months of the year. Argentina: