Issues with the summer harvest and declining grain prices have caused producers to delay purchasing agricultural inputs
05/06/2024
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Eduardo Monteiro — Foto: Divulgação
Issues with the 2023/24 summer crop and declining soybean and corn prices have caused Brazilian farmers to delay both the sale of their produce and the purchase of fertilizers for the upcoming season.
Despite a slight increase in input sales between March and April, notable delays continue. An agricultural input retailer in São Paulo noted that sales were about 30% below what was expected for the region by the end of April. Farmers are focusing more on repaying debts incurred from planting soybeans and off-season corn than on acquiring fertilizers for the next planting cycle.
At last week’s Agrishow, an agricultural technology fair, the Norwegian company Yara reported a 10-percentage-point decrease in this year’s fertilizer sales compared to previous years. By the end of April 2024, the market had only secured about 40% of the anticipated annual volume of fertilizers, which is less than the 50% achieved during the same period in 2023.
Guilherme Schmitz, the market development director at Yara Brasil, explained, “Many producers are speculating that fertilizer prices will drop and agricultural commodity prices will rise. However, this gamble could significantly strain logistics, especially considering Brazil’s vast geography, the known bottlenecks in the sector, and the large volume of fertilizers expected to be needed this year.”
Estimates indicate that the total volume of fertilizers needed in Brazil for 2024 could reach 46 million tonnes. The National Association of Dissemination of Fertilizers (ANDA) is set to release an updated survey on this matter soon.
Eduardo Monteiro, the country manager for Mosaic, shared his concerns at an event in Ribeirão Preto. He warned that a surge in fertilizer deliveries could heavily burden Brazil’s logistics infrastructure. He explained, “Brazil is already dealing with logistical bottlenecks. With the anticipated rush, freight costs are likely to rise, leading to longer queues at ports and increasing demurrage costs, all of which could complicate the delivery process significantly.”
Mr. Monteiro, who chairs ANDA, highlighted an additional factor: geopolitics, especially regarding the conflict between Russia and Ukraine. He pointed out the growing risk of impacts on prices and supplies as tensions escalate. “The risk is real and immediate, particularly if, due to the war, Russia cuts off supply of 35% of the global chloride. A week might be manageable, but not a month. And producers cannot be compensated in such force majeure situations caused by war,” he explained. He also noted that Brazil’s dependency on importing approximately 85% of the fertilizers used domestically exacerbates the situation.
*Por Cassiano Ribeiro — Ribeirão Preto
Source: Valor International