April 27, 2012

First Quarter Fertilizer Sales in Brazil up 7% Year-On-Year

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

During the first three months of 2012 Brazilian farmers have purchased 5.3 million tons of fertilizers, which is 7% more than the 4.9 million tons purchased during the same period last year. The majority of the fertilizer was probably used for the expanded acreage of safrinha corn as well as for other winter crops such as wheat. Additionally, farmers are purchasing fertilizers for what is expected to be a record breaking soybean crop in 2012/13.

Soybean prices all across Brazil are hitting record levels and farmers have been aggressive in not only selling their just harvested soybeans, but also in forward contracting their anticipated 2012/13 soybean production. These sales are putting money in their pockets and they are purchasing fertilizers and other inputs at an accelerated pace. In Mato Grosso for example, it is estimated that three quarters of the inputs needed for the 2012/13 soybean crop in the state have already been purchased.

Fertilizer purchases across Brazil though have not been uniformly higher than last year. In southern Brazil for example, fertilizer sales have been slower than last year due to the severe drought that lowered grain production in states like Rio Grande do Sul by as much as 50%. In Rio Grande do Sul, fertilizer sales for the first three months of 2012 was down 21% compared to last year as farmers assessed their crop losses due to the drought. According to the Syndicate of Fertilizer Industries in Rio Grande do Sul (SIARGS), only 260,000 tons have been sold compared to 332,000 during the first three months of 2011.

Combining the three states in southern Brazil, Parana, Santa Catarina, and Rio Grande do Sul, fertilizer sales during the first three months of 2012 totaled 1.0 million tons compared to 1.2 million tons sold last year. Sales are expected to increase when they start purchasing for the small grain winter crops especially wheat. Even though the production of soybeans and corn was greatly impacted by the dry weather in southern Brazil, the surging commodity prices have compensated for much of the decline in production.