InterviewBrazil fertilizers seen to drop on low demand

03 February 2009 22:29  [Source: ICIS news]

By Hellen Berger

SAO PAULO (ICIS news)--Fertilizer prices in Brazil could drop by more than over 40% this year due to the global credit crisis and a plunge in demand, an industry association official said on Tuesday.            

“I have heard that fertilizer prices for consumers have already fallen over that mark [40%] due to an extremely low demand,” said Eduardo Daher, director of national fertilizer distributors association (Anda).

“Moreover, seasonality of global fertilizer prices will be back and ruling the market this year,” he told ICIS news in Portuguese.

Credit difficulties have affected local farmers’ investments, Daher said, while purchases of fertilizers have fallen drastically since September, causing imports to fall.

“The country is not buying, nobody is buying…there are no more imports seen until April 2009 other than two ships,” said Daher.  

Brazil’s fertilizer producers have also reduced output, according to Anda. Domestic production hit 404,408 tonnes in December, down 45.8% year on year. For all of 2008, local production fell 9.6% to 8.9m tonnes from 2007.

Brazil’s fertilizer deliveries in December fell 37.9% to 977,397 tonnes from December 2007, Anda said.

In 2008, fertilizers distributed in Brazil totaled 22.4m tonnes, down 8.9% from 2007.

The drop in local fertilizer production may also be due to a drop in agricultural commodity prices in the second half of 2008, according to the Brazilian Census Bureau (IBGE).

Production costs for farmers have gone up because of the Brazilian real weakening against the dollar.

“Results for the fertilizer industry, however, would have been even worse, though, if currency trends had not inverted and the real had continued stronger,” Daher said.     

The price of urea, for example, dropped from $900/tonne (€702/tonne) to about $280/tonne, according to industry reports, while potassium chloride, previously sold for $950/tonne, is currently around $800/tonne.

Ammonium nitrate was sold last year at $600/tonne and was seen to be dropping to around $190/tonne, according to reports.

In average, Brazil imports some 70% of its fertilizer products such as potassium (93%), phosphate (50%) and nitrogen (70%), according to Daher.

($1 = €0.78)

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By: Hellen Berger
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