Last third of fertilizer purchases concentrates risk for soybean harvest

The sale of fertilizers for the current harvest is entering a decisive phase. Although soybean purchases keep pace with last year, the last third of demand concentrates the greatest risks of rising prices and supply difficulties, especially for phosphate fertilizers.

According to Rabobank's input analyst, Bruno Fonseca, until mid-June the volume of purchases for soybeans was close to that recorded in the same period last year, with around two thirds of the harvest's demand already closed. According to him, attention turns to this last third, in relation to the volume purchased and the pace of delivery of inputs.

Crops such as corn, coffee, sugar cane and citrus are, according to the analyst, in a calmer margin situation and, therefore, have been able to access fertilizers without major difficulties. Soy is identified as the crop under greatest pressure.

By nutrient, the scenario is also uneven. In potassium, access should remain smooth, with imports at a record volume until the end of May.

As for phosphorus, Fonseca points out a point of attention: the price of the input accumulates eight consecutive weeks close to US$ 900 per ton at the port, a level that puts pressure on producers' margins. According to him, producers who have already closed purchases tend to be the most capitalized; The greatest risk is precisely in the last third of demand, made up of those who tend to buy at the last minute, a group that may end up paying more or even facing difficulties in accessing the product.

Regarding the effects of the geopolitical conflict in the Middle East on consumption, Fonseca considers that the most alarmist scenarios outlined at the beginning of the conflict tend not to be confirmed. Rabobank has already revised its projection for fertilizer deliveries in Brazil from 49 million to 47 million tons, and the analyst indicates that a new revision, of around 2 million tons, should occur for 2026. Even so, he rules out more extreme scenarios, such as a drop to the 40 million ton range or a return to 2019 volumes. A decline to around 45 million tons, close to the 2024 level, is, in assessment, the most likely scenario.

Import data also shows a change in the composition of the phosphate mix: the share of products such as super triple and super simple, with a lower concentration of nutrients, increased compared to previous years. Even so, the total volume of imported P2O5, including super simple, super triple and MAP, was slightly above that recorded in the same period last year.

The negative highlight is MAP: imports of the product are at the lowest level for the first five months of the year since 2018, according to data from Secex. Between January and May this year, around 1 million tons of MAP were imported, a volume close to that of 2018, when 715 thousand tons were imported in the same period. In all other years of the series, the volume was above 1.075 million tons.

For Fonseca, this delay in the arrival of imported volumes should generate a period of tension for companies and producers, especially for those who wait until the end of the cycle to purchase fertilizer.

The monitoring windows, according to him, are: until mid-August, the focus is on imports and purchases for soybeans; From August onwards, attention turns to off-season corn, starting with urea imports and, subsequently, the evolution of nitrogenous purchases, as the producer tends to concentrate these purchases only after closing the last third of soybean demand, which should occur from mid-August onwards.

Fonseca does not rule out a new rise in prices at this time, when the harvest areas once again demand input simultaneously, an effect that could be amplified by a possible strong demand from India in import auctions and by the uncertain duration of the conflict in the Middle East.

Wharlhey Nunes, from Itaú BBA, assesses in a report that there must be a "decision to reduce phosphate fertilizers must persist among some producers, reflecting high prices and greater financial constraints".

"With the lower availability of phosphorus and firm prices, the probability of adjustment in the technological package and greater exposure to production risk increases", said the analyst.

For corn, however, the assessment is more cautious. Crop sales remain below average across most of the country, while there is a limited window for the delivery of fertilizers before planting. The situation is considered more worrying in the Central-West, where the sowing calendar is more advanced and purchases are more delayed. In the South, although the schedule is more flexible, Itaú BBA warns that, with no prospect of a drop in MAP prices similar to that recorded in urea, postponing purchases until the last moment could represent a risk.

Source: CNN