Brazilian farmers accelerate input purchases for record corn acreage

Brazilian corn producers are accelerating their input purchases with plans to plant a record corn area in 2024, according to the country's market analysis agencies. 

The stimulus comes from increased domestic corn prices, which rose about 30% in the second half of this year due to high demand, according to Cepea (Center for Advanced Studies in Applied Economics) at the University of São Paulo (USP).

According to a survey by market intelligence agency Agrinvest Commodities, seed and fertilizer purchases for corn have already exceeded 70% of the projected total. Analysts report this performance represents an advance of up to ten percentage points compared to the same period last year.

Jeferson Souza, Agrinvest's input market specialist, states that producers are more optimistic than in the previous season, and the financial situation is entirely different. According to the specialist, while producers were suffering losses until mid-year, the scenario changed in the second semester, and farmers have now increased their average profitability.

"According to our latest surveys, fertilizer purchases for Brazil's second corn crop have exceeded 75%. However, some regions still have significant open purchases, exceeding 50%. Analyzing the exchange ratios for corn, we're in a very interesting moment. Even with the dollar's rise, the trading environment remains quite favorable," he states.

He exemplifies the current situation by mentioning the Brazilian state of Mato Grosso, where the exchange ratio between corn and ammonium sulfate is below average and stands as the lowest in four seasons. 

"What's interesting to observe is that, in recent years, ammonium sulfate use has increased in Brazil. The fertilizer has proven competitive, encouraging its use," the analyst pointed out.

Fábio Meneghin, founding partner of market analysis agency Veeries, stated that "advanced corn sales have gained momentum. Future corn price indicators in main producing regions are at much better levels than last year and above levels from a few months ago."

According to him, the current scenario has "strongly encouraged producers to acquire necessary inputs for the 2024-2025 corn crop, which begins planting in January. A significant expansion of areas is expected. One of the key factors for this anticipation is strong domestic demand, especially in regions where corn ethanol has consolidated as an important market driver."

Another agency corroborating the prediction of increased corn area is Agroconsult, which forecasts a 5% expansion, reaching 17.8 million hectares for Brazil's main cereal crop. This increase would mean a new record, fully compensating for the reduction in corn area during the first crop in the Brazilian winter.

"After closing the soybean planting calendar within the ideal window, we saw an acceleration in input sales for the second crop," said Agroconsult's founder André Pessôa during a recent event promoted by Anec (National Association of Cereal Exporters).

Future Harvests

According to Jeferson Souza, the trend is for growth in Brazil's corn area in coming years, mainly due to rising demand for ethanol production: "Some data are exciting: in the 2017-2018 season, corn demand for ethanol represented less than 1.0 million tons. According to our surveys, by 2027-2028, the potential use of cereal for this purpose could exceed 35 million tons. The growth is phenomenal!"

Agrinvest's input market specialist projects even more growth in the future with strong demand from corn-crushing for ethanol production. "This agenda will be interesting, especially in some regions, like the Brazilian state of Bahia, which will soon have a plant. I see that we will discuss not only crushing for ethanol but also the country's biodiesel potential," he said in conclusion.

Fertilizer Record

According to Agrinvest, 2024 will be consecrated as Brazil's highest year for fertilizer imports. According to ANDA (National Association for Fertilizer Diffusion), Brazilian imports should reach 40.65 million tons, compared to 39.44 million tons in 2023. If this number materializes, it will be the first time in history that Brazil's imports exceed 40 million tons.

Among this amount, certain products stand out, such as potassium chloride, simple superphosphate, and ammonium sulfate. These three items, along with medium-concentration NPs, will be crucial for achieving the volume above 40 million tons.

On the other hand, national fertilizer production reached its peak in 2022, when Brazil produced 7.053 million tons of fertilizers. In 2023, the first decrease in production quantity occurred, dropping to 6.796 million tons. Now, for 2024, another decrease is estimated. This decline in national production occurs mainly due to the closure of nitrogen-producing plants.

(Editing by Leonardo Gottems, reporter for AgroPages)