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June 25, 2015

Sales of Crop Inputs Increasing in Brazil, but Still Lags Last Year

Farmers in Brazil have recently increased the pace of input purchases, but they still remain very cautious due to a lack of credit, low commodity prices, and general economic uncertainty in Brazil. According to the Mato Grosso Institute of Agricultural Economics (Imea), by the end of April farmers in the state had purchased approximately 22% of their needed inputs, which at that time was 48% behind the pace of 2014.

The purchasing pace accelerated during May and by the end of the month, farmers had purchased approximately 64% of their anticipated inputs. Even with the increase, the purchasing pace is still 11% behind that of 2014 and there continues to be a concern about getting the products in place before planting starts in mid-September.

Early planting will start in approximately three months and there is the possibility that logistical bottlenecks will develop when a large amount of products need to be moved in a short period of time. This is especially true for fertilizers. Approximately 70% of Brazil's fertilizers are imported into ports in southern Brazil and are then trucked to the interior of the country. The state of Mato Grosso is the largest grain producing state in Brazil and it is the state furthest away from the ports making transportation slow and costly. Ideally, farmers in the state want all their inputs in place ahead of time so when the rainy season starts, planting can proceed uninterrupted.