Brazil receives fertilizer in time for next soybean crop

Import is a relief amid fears of disruption to shipments from Russia, the main supplier.

O Brazil imported record amounts of fertilizer for its giant crop of Soya relief amid fears of disruption to shipments from Russia, the main supplier.

The industry feared not getting enough fertilizer because of sanctions against Russia for the war in Ukraine and the maritime chaos that unfolded in the Black Sea region. Brazil is the world’s largest exporter of several crops, including soybeans, and a lack of fertilizers could result in smaller harvests. This would drive up food prices around the world, which are already at record levels, driving more people to hunger.

Total fertilizer imports from January to April surpassed record purchases in 2021, according to government data and companies tracking shipments.

“We have already received more than 70% of all our purchases for the soybean crop, and the rest of the deliveries are scheduled within the normal wait,” said Leandro Bianchini, commercial supervisor at Coacen, the largest agricultural cooperative in Mato Grosso. “In corn, we still have a lot to buy and a smaller window to operate.”

There’s a lot at stake. Fertilizer supply will determine how many hectares of soybeans Brazilian farmers will sow, according to Marcela Marini, a senior analyst at Rabobank in São Paulo. If fertilizer shipments continue to flow in June and July, months when imports peak, growers could increase planting by 3.7% to 42 million hectares, even amid soaring agricultural nutrient prices, said.

Soybean producers’ margins are expected to be 56% above operating costs in the next crop, higher than the five-year average and the third-highest level on record, according to Rabobank’s estimate.

Initially, Rabobank estimated that Brazil would lack a third of its potash needs. Now the worst case scenario is up to 20%, according to bank analyst Bruno Fonseca.

Potash is nearly three times as expensive as it was last year, according to Bloomberg Green Markets data. Inputs are expensive for a number of reasons, including soaring prices for natural gas, a key ingredient in nitrogen-based fertilizers, sanctions on a major Belarusian potash producer and Covid restrictions that have disrupted global supply chains.

The invasion of Ukraine by Russia, a major exporter of all major fertilizers, has thrown the market into even greater chaos.

Different crops need different nutrients. In September, Brazil will plant soybeans, which need phosphate and potassium that come mainly from Russia and Belarus. These imports are the ones that grew.

Nitrogen, widely used in corn, is still scarce. However, that crop will not be planted until March 2023, and nitrogen imports are seasonally lower for this time of year and are expected to increase, according to Marina Cavalcante of Green Markets.

Source: Bloomberg