Brazil Gets Critical Fertilizer Shipments in Time for Soy Planting

Top soybean producer imports record amount defying supply chain chaos

Soybeans during a harvest on a farm near Brasilia.
By Tarso Veloso Ribeiro, Elizabeth Elkin and Tatiana Freitas
May 25, 2022 | 09:58 AM
Reading time: 3 min.

Bloomberg — Brazil is importing record amounts of fertilizer for its massive soybean crop, relieving concerns about supply chain disruptions for products from Russia, its No. 1 supplier.

There was worry that the South American nation wouldn’t be able to get enough fertilizer because of sanctions against Russia for the war in Ukraine, as well as shipping chaos that’s unfolded in the region. Brazil is the world’s biggest shipper of several crops including soybeans, and a shortfall of fertilizers could result in smaller harvests. That would drive up food prices around the globe, which are already at all-time highs, pushing more people into hunger.

Total Brazilian fertilizer imports from January to April are higher than they were in 2021, when there were record purchases, according to data by  both the government and companies that track imports.

PUBLICIDAD

“We’ve already received over 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 for Coacen, the largest agriculture cooperative in Mato Grosso. “On corn we still have lots to buy and a smaller window to operate.”

The stakes are significant. Fertilizer supplies will determine how many hectares of soybeans Brazilian farmers will seed, according to Marcela Marini, a senior analyst at Rabobank in Sao Paulo. If fertilizer shipments continue to flow in June and July, months when imports peak, producers may increase plantings by 3.7% to 42 million hectares even amid skyrocketing crop nutrients prices, she said. Margins from soybean sales are seen at 56% over operational costs next season, above the five-year average and the third largest ever reported, according to a Rabobank estimate.Initially, Rabobank estimated that the South American nation would have to deal with a lack of about a third of its potash needs. Now, in the worst case scenario, Rabobank sees a shortage of as much as 20%, said Rabobank’s farm inputs analyst Bruno Fonseca.

Potash is nearly three times as expensive as last year, according to data by Green Markets, a Bloomberg company. The chemicals are expensive for a host of reasons including runaway pricing for natural gas, the key ingredient for nitrogen fertilizer, sanctions on a major Belarusian potash producer, and Covid-19 restrictions that have disrupted every global supply chain, including chemicals. The invasion of Ukraine by Russia, a huge exporter of every major fertilizer, has sent the market into further chaos.

Fertilizer Hunger Continues | Disruptions and record prices are not reducing Brazil's appetitedfd

Different crops need different nutrients. In September Brazil will plant soybeans, which need phosphate and potash that comes mainly from Russia and Belarus. Those imports are the ones that are booming. Another, nitrogen, used heavily in corn, is still scarce. However, that crop won’t be planted until March 2023, and nitrogen imports are seasonally smaller for this time of year and should increase, according to Marina Cavalcante, an analyst at Bloomberg’s Green Markets.

PUBLICIDAD

“The geopolitical conditions make it very difficult for products to come from Russia and Belarus, there was also a price variation, but Nutrien will be able to serve all customers in Brazil,” said Andre Dias, the chief executive officer of fertilizer giant Nutrien Ltd. in Latin America.

Fertilizer Suppliers | Brazil has almost a third of its imports coming from nations under conflictdfd

Lineup companies, whose job it is to track what products move by ship and where they go, are also seeing more fertilizer imports coming to Brazil from Russia compared to last year.

To be sure, there are no “guarantees” this year for any product, given the strong necessity of imports, said Cavalcante. Brazil imports more than 85% of the fertilizer that it consumes.

Logistics headaches at ports could still be a problem. Arthur da Anunciação Neto, the commercial director for agricultural lineup company Alphamar, said wait times for ships sitting in Brazilian ports are nearly double those in 2021.