Brazil's ports are becoming congested with fertilizer shipments just as sugar merchants are gearing up for a rise in sugar imports, raising concerns over a repeat of the hold-ups which sent prices of the sweetener soaring last year.
Leading crop analyst Michael Cordonnier warned of delays of up to 23 days in ships waiting to unload fertilizer at Brazilian docks, to feed demand for nutrients expected to hit a record 25.9m tonnes this year, up from 24.5m tonnes last year.
The hold-ups come when sugar investors are keeping a close eye on Brazilian port congestion for fear of a repeat of the queues last year which delayed significantly shipments of the sweetener from the world's top exporter, contributing to a revival in prices of the commodity.
Thomas Kujawa, at Sucden Financial in London, said on Monday there was "chat of a line up of ships building up in the Brazilian ports".
'Room is limited'
When asked whether the congestion in fertilizer imports would dent Brazil's ability to ship sugar, Dr Cordonnier told Agrimoney.com: "You have to say yes. Room is limited."
Paranagua, Brazil's main fertilizer-handling port, is also one of the two top sugar ports, with Santos – which also handles big quantities of fertilizer.
However, rainfall was likely to have a bigger impact on Brazil's capacity for sugar exports, given the port's lack of covered facilities for loading the sweetener, whose quality is impaired by damp.
Beating price rises?
The rise in Brazil's appetite for fertilizers comes as its farmers, like those in other agricultural nations, seek to raise yields to capitalise on elevated crop prices, which on Monday rebounded on futures exchanges from a sharp sell-off last week.
Furthermore, farmers in the second-ranked soybean exporting state, and third-ranked corn grower, besides being the biggest producer of coffee and sugar, are buying their fertilizer earlier this year – again, a pattern being repeated abroad amid fears of a 2008-style ramp-up in nutrient prices.
While Brazil's growers have typically bought 35% of nutrients in the first half of the year, this proportion might reach 45% in 2011, Dr Cordonnier said.
One tonne of fertilizer cost the equivalent of 29 sacks of soybeans, or 1.4 tonnes, last year, compared with 40 sacks, or 2.4 tonnes, in 2008.
'Strong demand'
A rise in Brazil's fertilizer imports to meet rising demand has been confirmed both by Anda, the domestic industry association, and Vale, the iron ore-to-phosphates giant, which late on Friday forecast a rise of 15% in potash imports this year, "alongside rising prices".
"Potash prices have been rebounding, influenced by the surge in food prices," Vale said.
"Two of the key crops for potash, corn and sugar cane, have their prices at levels above the peaks of 2008. Therefore, demand is very strong."
The group revealed that its Vale Fertilizantes nutrient division achieved earnings of R$114m ($71m) in the January-to-March quarter, up from R$7m a year before, helped by a series of acquisitions.
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