Brazilian agrochemicals market to stand at USD 13.7 billion

By Leonardo Gottems, reporter for AgroPages

The Brazilian crop protection product market is expected to remain stable at around USD 13.7 billion, according to Rabobank projections. This will occur because the “increase in consumption promoted by the expansion of the agricultural area must compensate the reduction in prices in dollars”, points out the study “Perspectives for Brazilian agribusiness”, which AgroPages have first hand access.

Specialized in agribusiness, Rabobank says that, despite the fact that pesticide prices are higher in Reais, the excess inventory at the beginning of the year and the strong exchange devaluation brought down prices in dollars in the first half: “They started to recover as of June, motivated by the improvement of farmers' margins, but they should still remain at levels below those seen last year”.

For 2021, the financial institution projects, agricultural pesticide prices should continue to be driven by commodity prices as well as by the movement of the real against the dollar: “The maintenance of agricultural producers' margins above average in recent years should continue to encourage both use of high technology in crops and investment in new areas for the 2021/22 harvest, favoring the demand for inputs”.

“The exchange ratio for agricultural products with fertilizers has improved significantly in recent months for the main commodities, mainly for corn, soybeans and cotton. As a result of this improvement, some producers have been anticipating purchases for the 2021/22 harvest since July of this year ”, points out the report in this context, Rabobank projects a growth in demand for fertilizers just below 4% in 2021, exceeding 38.8 million tons.

“In the international market, the resumption of demand from the USA and Europe expected in the coming months should push fertilizer prices up between the end of this year and the beginning of 2021. The increases in the prices of nitrogenous, phosphate and potash, tend to last until the beginning of April, when the northern hemisphere reduces its purchases. After this period, the supply surplus between April and June should bring relief to global fertilizer prices. The drop in prices should be more significant for nitrogenous products – which may reach the lowest level seen this year, due to the increase in the installed capacity for urea production – and a little less intense for phosphates and KCL, especially if commodity prices if they remain at levels higher than those of 2020. In the second half, prices are expected to rise again with the seasonal increase in demand ”, concludes the Rabobank report.