Commodities Shuttle: Risk of fertilizer shortage is far away, but 2022 harvest worries

The risk of a shortage of fertilizers in Brazil is far away, but it does exist, and there are concerns about the 2022/23 crop, which should start planting in the second half of next year.

The fertilizer sector has experienced physical, economic and geopolitical disruption, but there should not be a supply crisis in the sector.

This was one of the topics of discussions at the 8th Brazilian Congress on Fertilizers, held by Anda (National Association for the Diffusion of Fertilizers), this Tuesday (23).

The industries, with low profitability in recent years, did not invest in a significant increase in the product offer. Hence the rise in prices, caused by greater demand in the countryside.

There will be a reduction in farmers’ profits, but there will be no significant shift in demand because commodity prices will allow demand for these inputs, according to congress participants.

Carlos Cogo, from Cogo Inteligência em Agribusiness, says that in this world scenario of rising prices and reduced supply, Brazilian producers will do better than North Americans.

But, according to him, while the purchase of the fertilizer package required 6.4 bags of soybeans per hectare for the 2021/22 harvest, it would require 13.9 bags in the 2022/23 harvest, if it were carried out under current conditions in the southern regions. and Southeast.

For Alzbeta Klein, president of the IFA (International Fertilizer Association), fertilizers have increased on the back of strong demand, caused by rising commodity prices and demands to produce higher volumes of grain.

In addition, Covid-19 raised concerns about food security in both 2020 and 2021, which led many governments to increase food imports and increase inventories, according to Klein.

The industries in the sector also suffered from the effects of the disruption of the economy and inflation, coming from freight, energy and other sectors linked to the fertilizer industry. This changed the fundamentals of the fertilizer market, according to the president of the IFA.

Brazil is exposed to the international market, and is responsible for 14% of the financial volume of global input imports, but producers benefited from commodity prices, mainly soybeans and corn.

For Corrine Ricard, president of Mosaic Fertilizers, the prices may seem frustrating in the short term, but they encourage industries more in their investments.

According to congress participants, however, there are no major projects ahead. In addition to being time consuming, they are also susceptible to current high costs, especially energy.

Cogo emphasizes, however, that the costs are for all producers, both for countries with a fertilizer industry and for countries that do not operate in this sector.

Many regions may not be able to support this price rise, especially subsistence agriculture in Africa .

Marcos Jank, from Insper Agro, believes that this scenario of disarray in the Brazilian economy is a matter of concern. High fertilizer prices increase the value of commodities, which puts pressure on food and creates more inflation.

The positive side, according to him, is that external demand remains firm, world stocks are low, the real favors exports, and logistics are starting to improve.

“The problem, however, is if there is a mismatch, with a drop in commodity values ​​and continued high prices for agricultural inputs. This is an important point, which requires caution with the future,” says Jank.

Marcello Brito, president of Abag (Brazilian Agribusiness Association) has another concern. There will be no shortage of inputs, but they will be much more expensive.

“The large producer, with management and highly professionalized, supports this increase. I am worried about the small and medium that do not have cash”, he says.

For Guilherme Bastos, secretary of Agricultural Policy at the Ministry of Agriculture, 2022 will be a period of immense challenge. The sector will have a greater need for rural credit and resources for subsidizing insurance.

The Minister of Agriculture, Teresa Cristina, announced at the event the creation of a committee to debate the main themes in the input sector.

The chairman of the board of directors of Anda, Eduardo de Souza Monteiro, said that, based on information from private consultants, sector sales should surpass, this year, the record 40 million tons registered in 2020.

Sugar cane Crushing in this 2021/22 harvest is expected to drop to 568 million tons, 13% less than in the previous one, according to an estimate by Conab (National Supply Company).

Less sugar Production will be 34 million tons, with a reduction of 18%. The offer of alcohol from sugarcane and corn will reach 28.3 billion liters, with a drop of 13%.

From cana The total production of ethanol from sugarcane drops to 24.8 billion liters, with a drop of 17%. Corn-derived fuel, on the other hand, rises to 3.5 billion, with an evolution of 15%.

Biotechnology Brazil and China should intensify dialogue and cooperation on biotechnology, representatives of the two governments defended at a forum of the Brazil-China Business Council, this Tuesday (23).

Search Celso Moretti, president of Embrapa, wants more Brazilian researchers in China, while Yang Wanming, the Chinese ambassador to Brazil, wants cooperation in the development of seeds.