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Brazil coffee, corn producers slow fertilizer purchases amid price weakness

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Coffee and corn producers in Brazil slowed fertilizer purchases amid a decline in prices, although deliveries to soybean and sugar cane growers showed late-2017 strength, data from Fertilizantes Heringer show.


While overall fertilizer deliveries in Brazil in the October-to-December period, at 9.6m tonnes, were in line with those a year before, data from industry group Anda show, statistics from Fertilizantes Heringer indicate marked differences between demand from different farmer segments.


Deliveries to sugar cane growers soared 26% year on year during the quarter, extending a positive trend for 2017, during which volumes grow by 17.6%.


For soybeans, the quarter brought a reversal, with volumes soaring 57%, although this still left volumes down 11.3% for 2017 as a while.


Volume declines


Nonetheless, that represented a better performance than for corn, in which volumes dropped by 14.8% for the October-to-December period, and by 18.5% for 2017 as a whole.


And for coffee, the last three months of last year brought a reversal in volumes, which dropped by 17.0%, curtailing growth for 2017 to 3.6%.


Demand for fertilizer is seen as linked to crop prices, with Fertilizantes Heringer – in which Canadian potash group Nutrien and Moroccan fertilizer giant OCP are major shareholders – indeed stressing the impact of falling corn and soybean values in limiting nutrient sales to these segments earlier last year.


The group also highlighted some “slight” late-year improvement in the so-called “barter ratios” against soybeans, corn and sugar cane – the price of fertilizers compared with crops, a trade that many Brazilian growers make to fund inputs.


However, for coffee growers, the barter ratios deteriorated to their worst in getting on for two years, as values of arabica coffee, the main type grown in Brazil, eased on international markets.


Coffee, corn production outlooks


The data come amid high expectations for Brazilian coffee output this year – a key factor in depressing prices – albeit with Rabobank last week cutting its production forecast to 56.8m bags following a crop tour.


The late-year drop in corn fertilizer demand, meanwhile, tallies with ideas of a reluctance to seed safrinha crop, sowings of which are nearly complete, in the face of Brazilian corn prices which ended 2017 down 12% year on year, according to data kept by research institute Cepea.


Conab, the official Brazilian crop bureau, has estimated domestic safrinha corn sowings down 720,000 hectares year on year, at 11.39m hectares.


However, a recent rally in prices has spurred some ideas of a surge in late safrinha corn plantings, although late seedings are more vulnerable to damage in the dry season.


Brazilian corn prices, at R$42.92 per 60kg bag, are up 29% over the past month, according to Cepea, with gains attributed to factors including the dryness in Argentina and hoarding by Brazilian farmers, said to have been prioritising sales of soybeans instead.


Growth to accelerate


Fertilizantes Heringer issued the data as it reported a loss of R$23.18m for the October-to-December period, compared with earnings of R$52.44m a year before.


While revenues rose by 8.3% to R$1.487bn, costs rose twice as fast, thanks to increased raw material prices and a greater reliance on imports.


The group forecast deliveries of 35.0m tonnes of fertilizer this year, up 600,000 tonnes year on year, doubling the rate of increase, of 300,000 tonnes, achieved in 2017, with hopes of market acceleration attributed “to the recent increase in grain prices”.

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