Brazil Fertilizer Buys May Signal Soy Acreage Boost

Economists estimate 4% increase, or more, in Brazilian soy plantings

As workers sweep up the last of the World Cup debris at Brazil's stadiums, the question now is how many acres of soybeans farmers there will plant for the 2014-15 season. One Brazilian consultancy, Agroconsult, estimates the coming soybean crop will be planted on 77 million acres, up four percent from 2013-14.

And though it's still early, one factor experts may be looking at as they make their calculations for the 2014-15 season is the rate of fertilizer deliveries ahead of planting.

After all, in 2012, the Brazilian soybean crop was responsible for 36.4% of all fertilizer used in Brazil. In 2013, that share climbed to 38.4%. So fertilizer orders and deliveries may serve as a fair barometer of the likely size of the Brazil bean crop. That makes soy Brazil's largest fertilizer consumer, followed by corn, sugarcane, coffee and cotton, in that order.

So I got in touch with Brazil's National Fertilizer Diffusion Association, where Executive Director David Roquetti said deliveries for the first half of this year were up nearly seven percentage points over the first six months of last year. That's 5,585,000 metric tonnes of N, P and K for the crops to be planted starting as early as this September.

Meanwhile nitrogen fertilizer deliveries were up 7.8% for the same period, likely reflecting increased planting intentions for second-crop corn, cotton, coffee and wheat.

It's been estimated Brazilian producers have already purchased up to 80% of their 2014-15 fertilizer needs, taking advantage of a cheap U.S. dollar and pretty good bean prices. And that's important. As Roquetti told me, "Brazil imported 77% of its fertilizer needs in 2013.

Related: More Corn Ethanol Plants on the Horizon in Brazil

But is the faster pace of delivery a sign of a likely increase in soybean planting intentions? It's not that easy, says Roquetti, who chalks the increase up to lower prices, as "in the first half of the year, average world prices were below the same time of last year," meaning the faster pace of deliveries is simply the effect of farmers betting fertilizer prices will climb over the coming months.   

Or maybe the faster pace is simply part of a trend. "Generally, 65% of all fertilizer (in Brazil) is delivered in the second half of the year, and 35% in the first half. However, we've seen that there's been a move to speed up deliveries. For example, in 2008, after the world financial crisis, we had practically 50% in the 1st half, and 50% in the second half (of the year)."

But if that trend holds, we should see a 7% rise in second-half Brazilian fertilizer deliveries, too, making the Agroconsult forecast soybean planting increase potentially conservative.

To know for sure, we'll just have to wait until the dust settles and the last of those World Cup souvenirs is cleared from Brazilian soccer fields.

The opinions of James Thompson are not necessarily those of Farm Futures or the Penton Farm Progress Group.

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