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Brazil soy farmers spend more to exploit their trade war edge
[SAO PAULO] Brazilian farmers will likely spend more money on soybean farming in the coming season as the US-China trade war continues to leave room for the South American powerhouse to increase its grip on the title of world's biggest exporter of the oilseed.
Crop-nutrient giants Mosaic Co and Yara International ASA expect fertilizer deliveries to Brazilian producers will reach a record. Planting in the country starts in September and most of the sales for the coming season have already been made, underscoring the confidence in the forecasts.
Brazil has benefited from China's yearlong trade dispute with the US, the second-biggest soybean exporter. A spring deluge that threatened crops in the US Midwest gave the South American country an added advantage.
While not providing an outlook for Mosaic's sales, Eduardo Monteiro, the company's supply director in Brazil, forecasts that deliveries will rise 2.8 per cent this year to 36.5 million metric tons. The gain will come as farmers spend more to help ensure a good harvest and as soy plantings climb by about 0.8 per cent, he said, estimating that producers have already bought about 80 per cent of the fertilizer they need.
"Farmers are in a good mood after a record corn harvest, profitable soybean prices and good prospects for shipments amid the ongoing trade war and weather issues in the US," Mr Monteiro said in a telephone interview.
Yara expects Brazil's soybean planted area to rise by 2.5 per cent this season as farmers divert pastureland and sugar-cane areas to the oilseed. That will lead fertilizer demand to increase by more than 2 per cent in 2019, according to Cleiton Vargas, the company's sales and marketing vice president in Brazil.
"Fertilizer demand remains promising amid uncertainties over the trade war between China and the US," Mr Vargas said by email.
Even as the amount of fertilizer deliveries should reach an all-time-high, the growth pace is starting to slow. The forecasts from Yara and Mosaic, which together account for about half of Brazil's fertilizer sales, are below last year's increase of about 3 per cent reported by the industry group Anda.
Demand was slower than usual in March and April, and it's still sluggish for this time of the year due to rising fertilizer prices in the country, according to Simone Correa, a market analyst at GlobalFert consultancy. She expects deliveries to increase between 1 per cent and 1.5 per cent this year.