South America Calling

The uptick in Brazilian fertilizer sales that started in July continued into August as farmers prepared soil for the 2015-15 grain season.

Fertilizer deliveries totaled 3.59 million metric tons (mmt) last month, just 0.5% lower than a year before, according to the Brazilian Fertilizer Distributers Association (ANDA).

While still a drop, the figure represents a revival compared with the first half of the year, although deliveries in the first eight months of 2015 remain 6.4% lower than the year before.

The consensus in the first half of the year was that farmers would use considerably less fertilizer on the 2015-16 soybean crop to cut costs at a time when input prices are rising due to the devaluation of the real and credit is tight due to the economic crisis.

But the latest figures indicate that slide will not be so dramatic and, analysts forecast that, assuming decent weather during the summer season, soybean yields will not be significantly affected.

That's because farmers have invested heavily in inputs over the last few years, creating a stock of nutrition in the soil.

In the first half of the year, analysts predicted Brazilian fertilizer sales would fall 5% in 2015-16. In light of the latest figures, a decline of 2% to 3% seems more likely now.

Given tight margins and the unpredictability of the Brazilian economic situation, it is common to hear cooperatives and major farmers comment that good yields are the best insurance against the risks that they face in the 2015-16 season.

(CZ)

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