May 9, 2011

Fertilizer Sales in Brazil Should set Record in 2011

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

With good yields and good prices for their 2010/11 crops, Brazilian farmers are now turning their attention to the 2011/12 growing season which will start in a few short months. Part of their attention will be directed at purchasing fertilizers for the next crop and fertilizer sales in 2011 are expected to set a new record.

Estimates are that Brazilian farmers will purchase 25.9 million tons of fertilizers in 2011 or an increase of 5.6% compared to last year. In 2010 Brazilian farmers purchased 24.5 million tons of fertilizers and the all-time record was 24.6 million tons set in 2007.

Brazilian farmers are also purchasing their fertilizers earlier than normal thus far in 2011. Traditionally most of the fertilizers in Brazil are purchased during the second half of the year, when approximately 65% of the fertilizers are purchased (35% during the first half of the year). This year farmers have been purchasing at a rapid pace and it might reach 45% bought during the first half of the year.

According to the National Association of Fertilizer Sales (Anda) fertilizer importers have accelerated their import pace in anticipation of greater purchases during the first half of the year. Much of fertilizers used in Brazil are imported and the volume of product arriving at Brazilian ports has caused congestion and delays of up to 23 days for ships to unload.

With improved margins, Brazilian farmers are expected to invest heavily in inputs including: seed, chemicals, and fertilizers. Due to an ever changing currency exchange rate, it is easier to look at the cost of fertilizers in terms of what it takes to purchase the fertilizer. In 2011, it is estimated that it will take 24 sacks of soybeans (60 kilograms each) to purchase one ton of fertilizer. In 2010 it took 29 sacks of soybeans and in 2009 it took 30 sacks. The worst year in recent memory was 2008 when fertilizer prices spiked and it took 40 sacks of soybeans to purchase a ton of fertilizer. Brazilian farmers were particularly hard hit that year because they purchased high price inputs such as fertilizers only to see commodity prices slump in 2009 as a result of the worldwide financial crisis.

The most advanced purchases of fertilizers are being made by farmers in the cerrado areas of Mato Grosso, Goias, and Bahia.