July 28, 2011

Domestic Fertilizer Prices on the Rise in Brazil

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

Brazil has set a national goal of being self sufficient in fertilizer production by the year 2020, but getting there in a little over eight years may be difficult. The problem is that Brazil currently imports approximately 65% of its fertilizers and the demand for fertilizers continues to increase in Brazil. The country currently imports 90% of its potassium, 49% of its phosphorus, and 65% of its nitrogen. According the Brazilian Association of Fertilizer Mixers, becoming self sufficient in nitrogen will be the easiest to achieve, but self sufficiency in potassium and phosphorus will take much longer.

The problem with phosphorus and potassium is that mineral deposits must be located and mining operations must be started. Potassium mines have been opened in the state of Sergipe in northeastern Brazil and phosphate deposits are being explored in the state of Minas Gerais in eastern Brazil. The domestic production of phosphorus and potassium is not expected to increase significantly over the next few years which means Brazil will continue to be at the mercy of the international markets for these important nutrients.

In the interim, Brazilian farmers will continue to pay increasing prices for fertilizers in addition to very high transportation costs to get the fertilizers from the ports in southern Brazil to the corn and soybean fields of central Brazil.

Fertilizer prices in Brazil have increased significantly over the past 12 months, but they are still below their peak set in 2008/09. Urea went from US$ 292 a ton last year to US$ 500 a ton this year. Potassium chlorate, which sold for US$ 375 a ton a year ago, is now selling for US$ 550 a ton. Triple super phosphate went from US$ 405 a ton last year to US$ 595 a ton this year. While these fertilizer prices are worrisome for Brazilian farmers, they are still well short of their peak of August 2008 when urea sold for US$ 870 a ton, potassium chlorate was US$ 900 a ton and triple super phosphate was selling for US$1,200 a ton.

While higher, these prices have not reached the point where farmers will consider cutting back on usage especially since commodity prices are so strong.