Oblivious to price drops, Brazil’s 2023 fertilizer purchases remain timid

The drop in fertilizer prices seen in the second half of 2022 wasn’t enough to encourage Brazilian farmers to upturn their purchases. In fact, the tendency goes the opposite: the rate at which producers secure fertilizer deals is the slowest in two years, according to a study by the American consultancy StoneX.

As of November 2022, early negotiations concluded in anticipation accounted for 41% of the total expected for the first half of 2023. This figure reveals the most cautious buying behavior exhibited by Brazilian producers since the consultancy began conducting such studies in 2020.

For comparison purposes, a year ago (November 2021), the volume of purchases closed for the first half of 2022 reached 49% of the total potential, and in 2020, 48%. The current drop is between 7 and 8 percentage points.

As for the second half of next year, early negotiations reached 17% – a decrease of 7 points compared to 2020 and two points compared to 2021.

See below the track record of the volume of fertilizers (hs 0207) Brazil imported between January 2019 and September 2022, according to DataLiner.

Brazilian Fertilizer Imports | Jan 2019 – Sep 2022| WTMT

Source: DataLiner (click here to request a demo)

Interest rates and supply

“The study brought to evidence a delay in fertilizer purchases that resulted from the current high levels of interest rates and no impeding risks of shortages in 2023, in addition to the long cycle of price drops for NPK [nitrogen, phosphate, and potassium], which prevailed in the last nine months,” informs a bulletin released by StoneX.

StoneX’s director of fertilizers, Marcelo Mello, recalls that at the end of 2020, the anticipation of purchases peaked driven by lower prices. As a result, while the value of a tonne of products fluctuated between US$ 200 and US$ 300 in the first half of that year, it went beyond US$ 1000 in the same period this year.

But the fall in fertilizer prices throughout 2022 – the year of historic high prices – has not yet worked as an incentive to accelerate early purchases.

The cost of a tonne of urea dropped by 44% since it hit the ceiling in March this year, going to US$ 561 (in Brazil) last week. MAP (water-soluble fertilizer with high Phosphate content) and potassium have seen similar declines since the first half of the year, around 55%, and were quoted at US$602 and US$548 a tonne, respectively, at the end of November.

Except for potash, the tendency is for prices to rise at the beginning of next year when farmers in the United States and Europe start making their 2023 purchases. Costs per tonne of urea and phosphates may grow close to 20% from January.

Source: Valor Econômico 

To read the full original article, please go to: https://valor.globo.com/agronegocios/noticia/2022/12/02/precos-de-adubos-recuam-mas-compras-para-2023-estao-fracas.ghtml

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