Brazil’s food inflation jumps as soybean oil prices surge on biodiesel demand

Brazil's food and beverages inflation rose 1.33% in May 2026 as soybean oil prices climbed on biodiesel demand. Official data put 12-month inflation at 4.64%, above the central bank's 3% target and 1.5-point tolerance band. The move sharpened the question of whether fuel policy was feeding into the grocery basket in one of the world's biggest farm exporters.

ISI Markets said preliminary weekly data compiled by CEIC showed Brazil's export index spiked in June, with more expensive meat contributing and the vegetable oil category, which in Brazil mainly means soybean oil, also turning higher. The firm said the series tracks export trends ahead of the United Nations' FAO monthly food inflation data. In Brazil, that matters because soybean oil is moving in a market already stretched by domestic fuel demand.

The policy backdrop has been shifting for more than a year. Brazil's National Energy Policy Council, or CNPE, temporarily held the biodiesel blend at 14% in February 2025, delaying a planned increase to 15%. On June 25, 2025, CNPE approved a rise to 15% from August 1, 2025, a move that signaled the government was still backing biofuels even after inflation and diesel-price concerns slowed the earlier step-up. The same June 2025 decision raised anhydrous ethanol in gasoline to 30% from 27%.

Abiove economics and regulatory director Daniel Amaral said roughly 70% of Brazil's biodiesel is produced from soybeans, underscoring how closely the fuel policy is tied to the oilseed complex. USDA's Foreign Agricultural Service projected Brazil's 2024/25 soybean oil output at nearly 12.0 million metric tons and exports at 1.3 million tons, while saying industrial soybean oil use remained strong despite the February 2025 freeze at 14%. The agency also said further biodiesel growth would likely keep exports near last year's level.

The price response has been visible before. Cepea said soybean oil prices in Brazil rose in late March 2024, driven by stronger food-industry demand and expectations of more biodiesel production. S&P Global Commodity Insights said surging biodiesel output diverted soybean oil toward domestic fuel use, squeezed export availability and helped keep prices elevated through early 2025, while Brazil more than doubled industrial soybean oil consumption over the past decade as biodiesel mandates expanded. That sequence leaves Brazil with a live test case: when the CNPE lifts biodiesel demand, soy oil tightens, and the inflation pass-through can show up in food prices.