High prices for soy and corn are spurring Brazilian farmers to plant more and the Brazilian fertilizer industry is expecting a record volume sales year. Fertilizers high cost, however, could have an impact for some crops in Brazil.
Mário Barbosa, president of Brazil's National Association for Distribution of Fertilizers (ANDA), said demand could surpass 26 million tons this year, compared with 24.6 million in 2007.
"We've been estimating growth of 5 or 6% up to now, but the decisive months are July and August when we'll have a clearer idea of how things are," said Barbosa, who is also president of Bunge Fertilizantes, the largest distributor of fertilizers in Brazil.
Barbosa said his estimate was conservative and had been revised upward after record fertilizer sales in the first half of the year. Sales rose to 11.3 million tons compared with 9.39 million in the first half of 2007, a 20% rise.
Though fertilizer costs have risen sharply in the last year depending on the crop and the soil it is grown in, the sharp rise in grains prices has cushioned the blow. But coffee and sugar cane growers say they are struggling with rising costs.
"In the case of sugar cane and coffee, it is quite probably that there will be a reduction in fertilizer use," said Barbosa.
Imports of fertilizer, which supply the bulk of Brazil's needs, rose in the first half of the year to meet demand. Domestic production has also increased.
"The industry (in Brazil) is working to capacity. We'll only see large growth in national production in 2010 when several projects come on line," Barbosa said, referring to Bunge's own planned investments to raise output.