Biodiesel producers hoping to resume operations in Argentina

Biodiesel producers in Argentina hope to resume operations in March or April after mostly shutting down late last year because of the price difference between petroleum and soybean oil, Marcelo Lopes, president of Brazilian biofuels firm IBI, told.
"Producers are seeking premiums of $ 100-120 on FOB vegetable oil even to do business," Lopes said, adding most biodiesel producers in Argentina had not been operating since November or December.

A drought affecting Argentina, meanwhile, has already been priced into the market.
"The drought will impact soybean harvest for sure, but I see little impact on prices as international markets have been adjusting for this and global commodity demand has tanked in general," Lopes said.

Before the collapse in world oil prices and the drought, Argentina had positioned itself as the world's third largest biodiesel producer in 2008, IBI said in a management report. The country produced between 1.1 mm tons-1.3 mm tons of biodiesel from its 18 plants.
Argentina is the world's largest soybean oil exporter and the country's export taxes favour domestic biodiesel production by imposing a 32 % export tax on soy oil. A 5 % blending mandate due to begin in 2010, meanwhile, is expected to create a domestic market for 625,000 tpy, according to IBI.

IBI's first plant in Rosario, Argentina has been ready to begin operations since May 2008.
The company broke ground on a second plant in Argentina in the fourth quarter last year and is planning for the construction of a third plant.