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Brazilian fertilizer sales growth to slow in 2014qrcode

Jan. 28, 2014

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Jan. 28, 2014
After three straight years of record growth, fertilizer sales in Brazil are still expected to increase in 2014, but at a slower pace than in 2013. Official sales numbers for 2013 will be released in February, but they are expected to show that Brazilian farmers purchased 30.9 million tons of fertilizers in 2013. Sales in 2014 are still expected to grow to 31.5 million tons, which would represent an increase of 3% compared to the 4.6% increase in 2013.

In 2013 Brazilian farmers increased their soybean acreage and they planted a record large safrinha corn crop as well. Commodity prices were at near record high levels for several years prior to 2013, so the farmers went into 2013 well capitalized and they used that capital to increase their fertilizer purchases.

Fertilizer sales are also influenced by overall farm income. In 2013, the gross farm income in Brazil grew by 12% due to good production and strong prices for soybeans, sugarcane, and corn. Corn prices were very good during the first half of 2013, but they fell sharply during the second half due to a record large safrinhas corn crop and a surprising large corn crop in the U.S. In 2014, the gross farm income in Brazil is expected to grow 8% due to record large soybean crop and a strong showing for rice and dry beans.

Soybeans represent 35% of the fertilizer sales in Brazil and according to the Brazilian Soybean Producers Association, income from soybeans is expected to increase 15% in 2014 compared to an increase of 22% in 2013.

Seventy percent of the fertilizers consumed in Brazil are imported and international fertilizer prices have fallen since mid-2013, but a weaker Brazilian currency has offset some of the price declines. Due to the volatility of commodity prices, input prices, and the currency exchange rate, a common practice in Brazil is to calculate how much grain is needed to purchase any given input.
During August of 2013, it took 70 sacks of corn (60 kilograms per sack) to purchase a ton of fertilizer and in November it took 65 sacks of corn to purchase that same ton of fertilizers. This method of calculating input costs can avoid the confusion of the ever changing commodity prices and exchange rates.


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