Apr 13, 2010
Brazilian Soy Producers Worried About Fertilizer Costs
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Soybean producers in Brazil are already worrying about the cost of producing their 2010-11 soybean crop. They are especially worried about the cost of fertilizer. After falling last year, fertilizer prices in Brazil are on the rise again as farmers start thinking about their 2010-11 crop plans.
Fertilizer costs are especially important for soybean produces in Mato Grosso and other areas of central Brazil. The native fertility of the soils in central Brazil is quite low, so producers need to replenish the fertility on a yearly basis. This is also the region where freight costs are the highest as well and since much of Brazil's fertilizers are imported, the freight costs to move the fertilizers from the ports in southern Brazil to the interior can be very high.
It is estimated that in 2010-11 fertilizer will account for 40% of the cost of producing soybeans in Mato Grosso. An historical average for the state is more in the range of 25 to 28%. Two years ago when fertilizer prices were very high, fertilizers accounted for approximately half of the cost of producing soybeans in Mato Grosso. Last November in Sorriso, located in central Mato Grosso, it took 22 sacks of soybeans (60 kilograms each) to purchase a ton of fertilizer. Currently, it would take 30 sacks of soybeans to purchase that same ton of fertilizer. In central Mato Grosso, for an average soybean production of 50 sacks per hectare, 16 of those sacks would go toward the purchase of fertilizers.
In Brazil as a whole, the cost of fertilizer will account for approximately 25 to 30% of the cost of producing soybeans in 2010-11. The historical average in Brazil is approximately 20 to 22% the cost of production.
Brazilian farmers usually purchase the bulk of their inputs in the June to August period. Input purchases thus far in 2010 have been light because they are not coming out of this harvest season very well capitalized. If soybean prices remain in the mid-nine dollar range through the next several months, Brazilian farmers will be forced to cut back on their fertilizer applications if they hope to make any money on their 2010-11 soybean crop. If they do reduce fertilizer applications, then it will be harder to achieve top yields in 2010-11.