Record corn and soybeans harvests in agriculture powerhouse Brazil are set to push demand for crop nutrients back to pre-war levels, according to a Bloomberg report citing the nation’s largest farm retailer.
Fertilizer sales will rise 11% in Brazil in the 2023-24 season, bringing demand back to levels seen prior to Russia’s invasion of Ukraine, Lavoro CEO Ruy Cunha said in an interview. Pesticide, fungicide, and other agrochemical sales are forecast to expand as much as 9%, he said.
Farmers around the world slashed fertilizer use after the war in Ukraine temporarily cut off nearly a fifth of the world’s nutrient exports, sending prices skyrocketing. As costs have fallen back to more normal levels, growers expanding plantings in the world’s largest corn and soybean exporter are starting to stock up again.
“For the upcoming crops, we see a return to normality when it comes to the application of fertilizers in Brazil,” Cunha said June 1. “Sales have already accelerated over the last three months.”
Fertilizer prices could still fall further, but the market is now closer to the bottom, he said. Sales for future delivery have gathered pace since March, but are still 10 to 20 percentage points behind levels achieved last year.
“Farmers are still cautious and are waiting to see commodities and inputs prices stabilize further,” Cunha said.
The Brazilian fertilizer market has been more resilient than in many other countries, as farmers selling crops in US dollar are making a bigger margin than American growers, for instance.
That’s helped Lavoro, a Sao Paulo-based company listed on the Nasdaq. Gross profit jumped 35% to $285 million in the nine months ended March 31, while revenue gained 25% in the period, the firm reported on June 1.
Lavoro, which also operates in Colombia and Uruguay, has expanded quickly after striking 24 deals since 2017, and more acquisitions are on the table. The company has a 10% market share in Brazil.
“Consolidation is only at the beginning, we see a huge opportunity,” Cunha said.