Vegetable crops in Brazil may have a tighter year ahead despite abundant estimated yields
Caio Alves
Published 2021년 12월 20일
The fertilizing market has been amid turmoil with supply shortfalls and logistics constraints since Q1. The herbicide supply for the onion and garlic crops somehow impacted the Brazilian market still presents its challenges for the following year. It affects other fruit, vegetable, and grain cultures.
The main reasons to believe in a tight year ahead for the fruits and vegetables, for example, lie on some critical aspects as mentioned below:
First of all, Belarus, one of the main providers of fertilizers, mainly potassium chloride, is going through Geopolitical tensions with Russia and the EU. As the country is landlocked, it depends on ports of other nations, which are afraid to allow these logistic routes for Belarusian products, including fertilizers.
Second, the hiking of various agricultural commodities since the second half of 2020 increased the economic margin of producers, especially in the United States. And with a perspective of favorable return, these farmers invested more in their production while deciding to rotate more and more of the oilseeds, resuming, in some cases, an increase in planted area. Of course, they were boosting demand for fertilizers. Still, it is not sure how demand will perform for the next year for these commodities; the shortage of a few of these may represent some foreseen pressure, like the rapeseed. Regarding the World Bank data, prices shall prevail in high levels compared to the pre-pandemic rates.
Third, due to stricter protocols, slower shipment activities, changes of important routes on the maritime shipment flow, and a consequent shortage of containers and vessels, combined with rising prices of fuels, the freight rates increased 362.6% in the last twelve months, according to FBX.
Fifth, the Chinese energy crisis comes next. As the country strives to reduce its burning coal usage to be replaced by natural gas and other possible resources, rates climbed and affected nitrogen base product costs, leading the country to curb exports of fertilizers to guarantee domestic demand.
The last factor is BRL currency. As an election year comes, instability with the local currency is given as the country still presents strong political polarization traces. Specialists point out the BRL to range from USD 4.8 to USD 6.25.
The main reasons to believe in a tight year ahead for the fruits and vegetables, for example, lie on some critical aspects as mentioned below:
First of all, Belarus, one of the main providers of fertilizers, mainly potassium chloride, is going through Geopolitical tensions with Russia and the EU. As the country is landlocked, it depends on ports of other nations, which are afraid to allow these logistic routes for Belarusian products, including fertilizers.
Second, the hiking of various agricultural commodities since the second half of 2020 increased the economic margin of producers, especially in the United States. And with a perspective of favorable return, these farmers invested more in their production while deciding to rotate more and more of the oilseeds, resuming, in some cases, an increase in planted area. Of course, they were boosting demand for fertilizers. Still, it is not sure how demand will perform for the next year for these commodities; the shortage of a few of these may represent some foreseen pressure, like the rapeseed. Regarding the World Bank data, prices shall prevail in high levels compared to the pre-pandemic rates.
Third, due to stricter protocols, slower shipment activities, changes of important routes on the maritime shipment flow, and a consequent shortage of containers and vessels, combined with rising prices of fuels, the freight rates increased 362.6% in the last twelve months, according to FBX.
Fifth, the Chinese energy crisis comes next. As the country strives to reduce its burning coal usage to be replaced by natural gas and other possible resources, rates climbed and affected nitrogen base product costs, leading the country to curb exports of fertilizers to guarantee domestic demand.
The last factor is BRL currency. As an election year comes, instability with the local currency is given as the country still presents strong political polarization traces. Specialists point out the BRL to range from USD 4.8 to USD 6.25.
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