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Brazilian fertilizer demand to rise this year

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Brazil's moribund fertilizer market will resume growth in 2016, Fertilizantes Heringer said.

Demand will reach 31m tonnes, the Brazilian fertilizer company said, as farmer incomes improve.

"The strong currency devaluation in 2015 raised the income of producers of export crops such as soybean, corn, coffee and sugar, among others," Heringer said.

Currency collapse

Brazil's currency collapsed in 2015, as the country saw its employment rate plummet, government debt soar, and its credit rating slashed to junk levels my ratings agencies.

"Despite the drop in agricultural commodity prices in the international market in the last 12 months, Brazil's strong currency devaluation raised prices in reais of such agricultural commodities, increasing the income of Brazilian farmers," Heringer said.

Brazil imports most of its fertilizers, meaning that real-denominated prices rose, and the economic crisis has made farm-financing hard to come by.

Barter ratio improves

But the "barter ratio," the cost of fertilizer against crop commodity prices, has been improving in the last quarter, as the dollar value of fertilizers plummet, Heringer said.

"Even with the price drop of some agricultural commodities in the foreign market, the strong currency devaluation in Brazil in 2015 offset this fall, keeping good returns to farmers."

National fertilizer demand was seen recovering to 31m tonnes, still behind the 2014 peak but the second highest level on record.

Deliveries plummet

Heringer's fertilizer deliveries were down 10% in 2015.

Deliveries in the last three month of year were down 23% against the same period a year ago.

The sharpest fall in demand was seen from corn, where Heringer saw deliveries down 42% year on year.

But deliveries for soybeans were more resilient, down just 1%.

According to the National Fertilizer Association (ANDA), national fertilizer deliveries were down 6% in 2015, at 30.202m tonnes, down 7% in the last three months of the year.

Imports were down 12%, although the country's domestic production rose more than 3%, as its product become more competitive due to currency effects.

Revenues fall, income rises

Heringer reported revenues down 5.4% in the last three months of 2015, at R$1,7193bn.

Still, the company's net income was R$53.8m, against a net loss of R$21.7m in the last three months of 2014.

Heringer shares were down 0.6% in Sao Paolo in morning deals, at R$1.80.

By Agrimoney.com

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