World production of biodiesel is forecast to climb to a record this year, with output in Brazil rising as the country increases mandates for incorporation in transportation fuel, Oil World said.
Biodiesel production may rise by 2 million to 2.1 million metric tons, or about 8 percent, to 29.1 million tons in 2014, the Hamburg-based oilseed industry researcher wrote in an e- mailed report. That’s less than last year’s 2.9 million-ton increase, Oil world said.
Processed vegetable oils can fuel diesel engines, with engineer Rudolph Diesel running the first working prototype of his engine on peanut oil in 1893. Governments from Brazil to the U.S. have set rules to boost use of renewable transport fuels and reduce burning of fossil fuels.
Rising use of vegetable oil for biodiesel is "still sizably exceeding the growth rates in other usage categories, like the food sector," Oil World wrote. "Palm oil is gaining importance as a feedstock, accounting for roughly a third of biodiesel output worldwide."
An estimated 9.5 million to 9.6 million tons of palm oil will be used to make biodiesel this year, according to the researcher. Indonesia’s production of palm-oil based biodiesel may increase by 1.2 million tons to 3.8 million tons, Oil World wrote.
Soybean oil use for biodiesel production is forecast to rise by 300,000 tons to 7.3 million tons, according to the report. Soybean-based biodiesel output in the U.S. is seen at 2.3 million tons, Brazil may produce 2.1 million to 2.2 million tons and Argentina 2.05 million tons.
Brazil’s biodiesel inclusion mandate will rise to 6 percent in July from 5 percent, climbing later to 7 percent, according to Oil World.
"Assuming that the higher mandates will be largely fulfilled, Brazilian biodiesel production may increase by 17 percent to 3 million tons in 2014," Oil World said.
Production in Brazil may show a "further massive increase" to 4 million to 4.1 million tons next year as 7 percent biodiesel inclusion is mandatory year-round, according to the industry researcher.