2023-08-04 23:35:38
By Roberto Samora
SAO PAULO (Reuters) – Fertilizer prices rose again in July as producers in Brazil prepare to plant the 2023/24 soybean crop, but gains in the value of the commodity left the agricultural input/output ratio still quite favorable for farmers, according to surveys released this Friday.
The Fertilizer Purchasing Power Index (IPCF), prepared by Mosaic, reached 0.87 in July, the same level registered in the previous month, remaining in the most favorable situation for farmers since the beginning of 2021.
The lower than 1, the greater the purchasing power of the producer, according to the IPCF methodology, which also takes corn, sugar, ethanol and cotton into account. In July of last year, amid the surge in fertilizer prices as a result of the war in Ukraine, the indicator reached 1.85, practically double the current level.
In July, the price of soybeans increased by 6.7%, driven mainly by the reduction in the estimate of planted area in the United States, Mosaic said in a note.
On the other hand, fertilizer prices registered an average increase of 5% in relation to June.
“Thus, even with fluctuations in the prices of commodities and fertilizers, the indicator remains the lowest of 2023; and the scenario remains favorable to the farmer, allowing for a good exchange ratio”, said the Mosaic analysis, which also cited drop in the price of some agricultural products, such as sugar cane (-7.6%), cotton (-2%) and corn (-0.3%).
“With the planting period approaching and the recurring good rates in the purchasing power of fertilizers, the sector is more heated, with the Brazilian farmer planning to acquire and receive inputs in advance and avoid logistical bottlenecks”, added Mosaic.
Deliveries of fertilizers in Brazil jumped 21.9% in May in the annual comparison, totaling almost 4 million tons, making it a positive consumption indicator for the year, informed the National Association for Fertilizer Diffusion (Anda) this week. Until April, the data had accumulated a fall of 4.4% in the year.
Analysis released this Friday by Itaú BBA also noted that fertilizer prices “reacted in recent weeks with increased international demand, after a long period of decline”.
However, the exchange ratio of fertilizers with soy is one of the most attractive in recent years, “even with the advance in input prices in recent weeks”.
In MAP fertilizer (monoammonium phosphate) and potassium chloride (KCl), the indicator remains below the historical lows of the last five years, said Itaú BBA.
“The future exchange ratio is also attractive in comparison with the averages of previous harvests”, said the bank, pointing to a ratio of 16.32 bags of soybeans per ton of product in the MAP, compared to 30.82 in the previous season.
For KCl, the producer would spend 11.61 bags of soybeans per ton of input, versus 30.78 in the previous harvest, according to the Itaú BBA study.
The fall in agricultural inputs such as fertilizers should favor the margins of soy producers in Brazil in the new harvest, said consultancy Céleres in a report this week, despite the fact that commodity prices are lower than last year.
The soybean crop in Brazil in 2023/2024 should reach a record of 165.9 million tons, growth of 5.5% compared to the previous season, with expectations of gains in average productivity and a more “modest” increase in planted area, said Celeres.
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