August 25, 2011

Fertilizer Sales in Brazil Surge 21%

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

Brazilian farmers have taken advantage of strong commodity prices to front load their fertilizer purchases in anticipation of the 2011/12 growing season. According to the National Association of Fertilizer and Veterinary Distributors (Andave), from January through July of this year, 13.9 million tons of fertilizers have been purchased in Brazil which is 21% more than the 10.9 million tons purchased during the same period in 2010. The biggest increase in fertilizer sales was for imported fertilizers which increased 51% during the first seven months of 2011 compared to an equal period in 2010. Domestically produced fertilizers increased 4.9% during the same period. Agricultural chemical sales have also increased during the same period, but not as much as fertilizers.

The president of Andave, Roberto Mota, feels the increase in input sales is the result of strong commodity prices and the desire on the part of the farmers to increase the productivity of their existing land instead of opening up new land for agricultural production. The price of land has increased in recent years and new environmental regulations are making it much more difficult to convert native vegetation to additional agricultural production. Therefore, farmers want to increase the production on their existing land.

Fertilizer prices in Brazil have increased 15% to 20% since February and chemical prices are up 0% to 10% during the same period, but according the Mato Grosso Institute of Agricultural Economics (Imea) a better way to judge the price of an input is to calculate how many sacks of soybeans are needed to purchase the input.

During the month of March, it took on average 17 sacks of soybeans (60 kilograms per sack) to purchase the needed inputs to produce one hectare of soybeans in Mato Grosso. During the month of July, it took 22.2 sacks to make the same purchases. Either the price of fertilizers and chemicals increased or the price of soybeans fell between March and July, or a combination of both. The 17 sacks needed in March to purchase the inputs was one of the lowest ever recorded and farmers took advantage of that and purchased large amounts of inputs. The situation was so favorable in fact that some farmers purchased their input needs for the next several growing seasons.

A typical soybean yield in Mato Grosso is generally in the range of 52 to 53 sacks per hectare.