June 21, 2011

Fertilizer Sales for Month of May Set New Record in Brazil

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

Brazilian farmers have been aggressive in purchasing their fertilizer needs for the 2011/12 growing season. Fertilizer sales in Brazil during the month of May hit a new record at 2.2 million tons or 63% more than in May of 2010 according to the National Association of Fertilizer Distributors (Anda). The increases in May are a continuation of what has been happening from January to May when fertilizer sales were 24% above the same period last year. Fertilizer imports have also been strong totaling 7.3 million tons from January to May. The month of May alone saw a 60% increase in fertilizer imports.

Strong commodity prices have left Brazilian farmers well capitalized and they have been purchasing inputs including fertilizers at a record early pace. Earlier in 2011, the fertilizers were applied to the safrinha corn and cotton crops in addition the winter wheat crop in southern Brazil and the sugarcane crop in the state of Sao Paulo.

The number one state for fertilizer deliveries during May was Mato Grosso at 1.75 million tons followed by the state of Sao Paulo at 1.26 million tons, and Parana at 1.24 million tons. Mato Grosso of course is the largest soybean, cotton, and safrinha corn producing state and Sao Paulo is the largest sugarcane producing state responsible for approximately 57% of Brazil's sugarcane acreage.

Many of these purchases were made through grain companies when farmers forward contracted their anticipated soybean production in exchange for inputs including seed, fertilizers, and chemicals. This type of exchange is very common especially in Mato Grosso where farms are generally much larger in size.

The soils in Mato Grosso and throughout central Brazil generally are less fertile than in southern Brazil and require more fertilizer applications. Approximately 43% of the cost of growing soybeans in Mato Grosso is for fertilizers.