South America Calling

Upturn in Brazilian Fertilizer Demand

After a slump in the first half of the year, Brazilian fertilizer deliveries surged in July, returning to levels seen in the same month last year.

And with demand remaining strong in August, the fertilizer industry is cautiously optimistic that 2015 won't be quite as bad after all.

"It remains unclear but it appears that we may be witnessing a recovery," George Wagner, chairman of the Brazilian Fertilizer Distributors Association, said during an event in Sao Paulo.

Consultants were forecasting a 5% decline in Brazilian fertilizer deliveries in 2015 as farmers cut back on inputs, but the late surge has caused some to now predict a 3% fall, said David Roquetti, executive director at ANDA.

Farmers had delayed decisions on the quantity of fertilizer they would buy, particularly for the summer soy and grain crop, amid a lack of credit in the first half of the year.

With little commercial credit available, small farmers had little choice but to wait, noted Wagner, although larger operations could arrange lines with trading companies and other parts of the industry.

However, the announcement of ample government credit in June and a sharp devaluation of the Brazilian real, prompted farmers to take the plunge.

With last-minute demand so strong, there may be some logistical bottlenecks, in particular a lack of trucks, but distributors have sufficient supplies to meet demand, said Wagner.

"The warehouses are full. The industry prepared for demand equivalent to last year's," he noted.

Brazilian fertilizer deliveries in the first seven months of 2015 were 10.5% lower at 15.0 million metric tons. However, August, September and October are typically the peak months.

Brazilian farmers will slightly increase planting of soybeans in the upcoming 2015-16 season.

(AG)

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