Mike: Hello and welcome to another episode of the Argus Fertilizer Matters podcast. My name is Mike Nash and I'm the senior editor for the fertilizer team based in London. Today on the show, we are going to take a look at the fertilizer market situation in Brazil, one of the largest and most influential markets in the world, accounting for one-fifth of global urea trade, nearly half of the world's map business, and a quarter of MOP imports. And today I'm delighted to be joined by Gisele Augusto, market reporter covering fertilizer markets for the Argus Brazil Grains and Fertilizers Market Report based in São Paulo. Gisele has been with Argus since December 2020, joining the company as a graduate trainee before rising through the ranks to join the fertilizer team in February of 2022. She's a graduate of the Universidade São Judas Tadeu with a bachelor's degree in social communication and journalism. Gisele, welcome.
Gisele: Hello, Mike. It's a pleasure.
Mike: So Gisele, how has the Brazilian domestic fertilizer market been developing in 2024 so far?
Gisele: Well, we have seen farmers focused on acquiring potash instead of other fertilizers for the past couple of months. And market participants estimate that around 70 to 80 percent of potash needs to plant soybeans for the 2024-25 crop has already been purchased in Brazil. So purchases are advanced the most in Mato Grosso state as it is usual, but some states are lagging this total. For example, the central-western Goiás state is estimated at around 60-65 percent of potash need. But this pattern is much related to barter rates in Brazil. Since February, soybean barter rates have been more advantageous for potash than for phosphates. This motivates farmers to purchase this fertilizer. Latest soybean barter rates in Mato Grosso are at around 70.82 bags per ton of NPK blend, considering a 60-kilogram bag of soybeans. This is around 0.3 bag per ton below barter rates for March and 0.9 bags below May 2023 level. Despite barter rates did not significantly oscillate compared to last year, farmers still expect grains and now its prices to increase. So they are holding purchases until the last minute so they can guarantee that they are not selling at low levels or buying fertilizers at high levels. Market dynamics in Brazil has been changing for the past couple of years. Farmers are no longer taking risks and buying much in advance. As a result, we also see a slower pace in imports as importers and traders also do not want to purchase and risk to end up with high-priced stocks.
Mike: Thanks for that, Gisele. So Brazilian imports, by how much did they slow down this year compared to the first quarter of last year?
Gisele: This year Brazil reduced its imports in the first quarter, especially for phosphates. So MAP volumes were around 40% below last year, while TSP and SSP dropped by around 70 to 90%. This reduction is much explained by this focus of the domestic market on Potash. MOP imports, for example, were closer to last year's levels, increasing by 2% on the year. The fertilizer that registered the greatest increase was granular urea as farmers postponed parts of the purchases that are usually done in the fourth quarter to the first months of 2024, boosting the levers in the period to supply winter corn crops.
Mike: And as the soybean season approaches, Gisele, are Brazilian farmers expected to ramp up MAP and other phosphates buying or may they cut phosphate application this season, do you think?
Gisele: Well Mike, Brazilian farmers are not expected to reduce phosphate application this season. They might change, however, on how they use B205. Farmers are preferring to acquire low content such as SSP and TSP compared to MAP and the Chinese NPs. TSP prices carry a wider discount to MAP 1152 than the usual $100 per tonne and is reaching $143 per tonne now. This can make TSP more attractive for farmers to use in NPK blends. This move was much anticipated earlier this year as market participants started to expect an increase in TSP Moroccan supply. The main choice among phosphates has been SSP, both for imports and in the domestic market. National producers are mostly sold out for prompts delivered and have volumes only for June and July. Usually, the national industry supplies the South, Southeast, and Center-West regions. Imports are more concentrated in the Northeast region as logistics to move the domestic production northbound is expensive. High volumes have been negotiating the import market for the past weeks for May and June loading from Egypt and Israel. The most used NPK blends for soybeans such as the 0-2020 and the 0-1818 work better if using SSP instead of other phosphate-based fertilizers, which also increases demand for SSP. The price of the P205 point in the 20% SSP in the import market and for MAP 1152 is similar, close to $11 per point. However, SSP also adds sulfur to blends, which makes it actually more advantageous. Purchases are expected to ramp up in the next weeks for phosphates as farmers need to guarantee volumes in time for application. Big changes on prices are not expected as cadenced demand helps to support the current levels.
Mike: That's fantastic. Thank you, Gisele. Great stuff as ever. Thank you for taking us through what's been happening in the Brazilian market and what we can see going into Q2. That brings us to the end of this Argus Fertilizer Matters podcast. My sincere thanks to Gisele Augusto, Market Reporter for the Argus Fertilizer and Grains report. Thank you, Gisele.
Gisele: Thank you, Mike.
Mike: And as always, thanks for listening, and don't forget to look out for the next episode, which we'll record in a couple of weeks. Until then, this is Mike Nash for Argus Media, saying bye for now. Bye-bye.
