Floris Bielders, commercial VP at the Brazil unit, told Reuters this week that Brazilian farmers have pre-sold about 20% of their next-season soybean crop, citing the strong dollar as the driver for the trend that is a boon for fertilizer suppliers.
“Mosaic is already receiving orders for fertilizer deliveries in the first quarter 2021,” Bielders said on Monday. “This normally never happens a year out. Farmers will only do it if they have good margins.”
Due in part to the global asset selloff caused by the coronavirus outbreak, the dollar has risen about 17% against the local currency this year, meaning farmers get more reais per grain sold on export markets.
“People have to eat and that has not changed,” Bielders said.
The Tampa, Florida-based company’s optimism comes after a challenging 2019, when wet weather in the United States affected global demand for phosphates products, leading to high inventories and price pressure.
On the other hand, trade tensions between the US and China benefited Brazilian grain growers, supporting stronger demand for Mosaic products.
The company plans to raise Brazil’s fertilizer output by 800 000 t to 4.5 million t this year mainly through resuming production at some halted local mines after new tailings dam regulations were enacted in 2019.
Soil nutrients are vital for Brazil’s large-scale farming, Bielders said, and the tropical country may still grow the area it cultivates significantly. The company has a 25% market share in Brazil, where it sold 9.2 million tonnes of fertilizer products last year.
Challenges to operating in Brazil remain, however, including unfavourable tax rules that make it uneconomical to produce fertilizers locally and recent efforts in congress to change rules governing farmer bankruptcies, which have increased risks for input suppliers selling on credit.
As such, Mosaic has become more “selective” about selling on credit, Bielders said.
On the supply side, the executive said the curtailment of much of the phosphate production in Hubei province due to the coronavirus could affect global prices.
In potash, production cuts that began in the second half of 2019 are bringing the market into balance in 2020.
Mosaic Fertilizantes was taken over from Brazilian miner Vale for US$2.5 billion in a deal concluded in 2018.
The miner has two seats on the board but does not participate in decisions.
Read the article online at: https://www.worldfertilizer.com/special-reports/13032020/mosaic-fertilizantes-predicts-growth-in-brazils-fertilizer-demand/