February 13, 2013

Fertilizer Sales in Brazil Expected to Set New Record in 2013

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

The National Association of Fertilizer Distributors in Brazil (Anda) expects fertilizer sales in Brazil in 2013 to set a new record of 30.5 million tons. They feel that strong commodity prices and increased acreage of row crops and sugarcane will push sales to new heights.

Income from soybean sales in Brazil is expected to increase at least 20% or more in 2013 resulting in soybean producers being well capitalized going into the 2013/14 growing season when they are expected to increase their soybean acreage once again. Increasing sugarcane acreage is also expected to result in strong fertilizer demand as well because replanted sugarcane fields require high amounts of fertilizers to get established.

Generally, only 35% of the yearly fertilizer sales in Brazil occur in the first semester of the year, but it is expected to be higher in 2013 due to increased safrinha corn acreage and more sugarcane being planted during the first half of the year. There may also be more demand for fertilizers during the first semester because many farmers in Brazil had to delay their planting last September and October due to a lack of fertilizers.

The majority of Brazil'ts imported fertilizers enter the country through the Port of Paranagua and work slowdowns by federal inspectors at the port last fall delayed the unloading of the fertilizer. Some vessels had to wait up to 60 days before they were unloaded resulting in delays getting the fertilizer delivered to farmers in the interior of the country. To avoid such delays this year, farmers are expected to order their fertilizers and take delivery much earlier.

Fertilizer prices used for soybean production in Brazil have increased over the past twelve months from R$ 933 per ton last year to the present R$ 1,050 per ton. For corn, the prices have increased from R$ 1,120 to R$ 1,190 per ton. But even with these increases, the amount of grain a farmer must sell to purchase the fertilizer has actually declined.

In early 2012, a Brazilian farmer needed to sell 22.8 sacks of soybeans (approximately 59 bushels) to purchase one ton of fertilizer to plant his next soybean crop. In early 2013, he now needs to sell 18.2 sacks of soybeans (approximately 40 bushels) to purchase that same ton of fertilizer. For corn, the trend is very similar. In 2012, he had to sell 44.2 sacks of corn (approximately 104 bushels) to purchase a ton of fertilizer and now he has to sell 41.7 sacks of corn (approximately 98 bushels) to purchase the same ton of fertilizer for his next corn crop.

Brazil needs to import approximately 75% of its fertilizer needs and fertilizer imports in 2013 are expected to increase 3.5% to 19.56 million tons. The Brazilian government has set a goal of being self-sufficient in fertilizer needs by the year 2020, but progress toward achieving that goal has been slow.