Rising defaults in rural areas, persistently high interest rates and delayed input purchases are raising doubts about the outcome of the next crop season, which could also feel the effects of El Niño. The issue has already triggered concern within the federal government.

Jeferson Souza, a market analyst at Agrinvest, said soybean farmers had bought 68% of the fertilizer volume expected for the next crop as of the first half of June. That percentage already factors in an estimated reduction of about 10 percentage points in demand for these inputs in 2026/27. The five-year average for this point in the season is 75%. For corn, which is planted after soybeans, the delay in fertilizer purchases is even larger, at 13 percentage points.

According to Veeries’ fertilizer sales index—which covers soybeans, summer corn, second-crop corn, cotton, sugarcane, wheat and coffee—farmers had purchased only 50% of the total fertilizer volume expected for 2026/27 by the first half of June. The average for the past three years, as well as the pace at the same point in 2025, is 60%.

Prices and debt

The main reason for the delays is the increase in fertilizer prices, said Bruno Fardim Christo, Veeries’ grains and fertilizers specialist. Sales of seeds and crop protection products are in line with the average, he said.

Experts say expectations over debt renegotiation in Congress have become a new factor behind the delays in input purchases, particularly fertilizers. They note, however, that the industry was already under pressure from the effects of the wars in Iran and Ukraine, which have made these inputs more expensive, as well as from high interest rates and lower farmer profitability.

“There is indeed a correlation. Debt and farmers’ financial situation have, in a way, an influence [on the delays]. The cause is multifaceted,” said Bernardo Silva, executive director of the National Union of the Fertilizer Raw Materials Industry (Sinprifert).

Other industry executives say that, as buying decisions are pushed back, some fertilizer shipments may not arrive at farms in time for the next summer crop planting. Similar complications have already hit the agricultural machinery industry, where sales fell 18% from January to April. Manufacturers expect to end the year with revenue 8% lower than in 2025.

Crop risk

With fertilizer use expected to decline, credit access becoming more difficult and concerns growing over weather conditions because of El Niño, the market has started to price in a possible reduction in the next grain harvest. “There are several reasons to say we may have smaller crops ahead,” one industry executive said.

That outlook is also under review at the Ministry of Agriculture. The ministry created a committee, which met for the first time last week, to discuss scenarios for the impact of climate problems on production. There are no forecasts yet, but the greatest concern is the lack of resources to subsidize rural insurance, as well as the absence of a guarantee fund that would allow farmers to obtain new financing.

In private conversations with financial-sector executives, farmers have already reported plans to reduce planted area and prioritize work in consolidated, lower-risk fields where margins may be positive. “Farmers in difficulty will have less capacity to operate because of a lack of credit and other factors. A smaller crop is likely,” a bank director said.

Reseller pressure

CropLife Brasil, which represents seed, crop protection, bioinput and biotechnology companies, said the market is facing a cyclical problem that is disrupting business with farmers. There is no “contraction” in the market, according to executive manager Renato Gomides, but delays in product sales are evident.

Last week, Eduardo Monteiro, the executive who heads Brazilian operations at fertilizer U.S. multinational Mosaic, said expectations surrounding the debt renegotiation bill have stalled talks and are affecting resellers in particular. The situation has deteriorated since April, he told journalists at an event in São Paulo.