Camila Fontana: Hello everyone, welcome to Market Talks, a weekly podcast series by Argus covering the commodities and energy sectors in Brazil and around the world. I’m Camila Fontana, deputy bureau chief of Argus in Brazil. I’m here with Gisele Augusto, one of the experts behind the Argus Brazil Grains and Fertilizers report. Today, we’re discussing fertilizer purchases for application in the 2025-2026 crop here in Brazil. But before that, we must address the impacts of the Iran-Israel conflict on the fertilizer market. Gisele, this is still very recent, but what do we need to know to assess the impact of this conflict on fertilizers?
Gisele Augusto: As you said, it's still too incipient to talk about, but we already started to see some impact on commodities in general, and especially on fertilizers since the beginning of the conflict in the 12th and 13th of June.
So first, what matters for fertilizers is the natural gas. So both attacks on both of the countries, Iran and Israel, we saw some attacks on gas fields and some gas treatment units. So this paralyzed part of the production in both of the countries.
And this affects the urea production because it's one of the raw materials to produce the nitrogen. And basically, Iran is a major producer of urea. Israel is not a producer of urea, but they have some gas pipelines that supply Egypt, for example.
And Egypt is a huge producer of urea. So this kind of tightens the global market for the fertilizer. And this is what we are seeing since the beginning of the conflict.
The Middle East is one of the major exporters of urea to the global markets, and Iran exports around 20pc of the total from the Middle East. And to Brazil, this is very significant because in Brazil, in 2024, we imported 20pc of our volumes from Iran. And this year, from January through May, we import around 30pc of our volumes from Iran.
This can be on the lineups as Iran or Oman. It differs on how it enters in Brazil. And we need to remember that this 13pc doesn't mean exactly that they are reducing their volumes to Brazil or that Brazil are not taking as much Iranian urea as it used to be.
But actually, it represents a drop because of the cuts in productions in Iran during the year. So it's still a very high number. After the attacks, the major impact we saw was, of course, on prices.
So global prices start to increase in major markets. In Brazil, first we saw the price increasing in the paper market. So in the first moment, all of the offers were pulled out of the market.
So we didn't have any number to work with. And then we started to look at the paper market. So we started to see some deals in the paper market happening on the first moment at $455 per tonne cfr Brazil.
And then in the next days, it went up to $490 per tonne cfr Brazil, dropped to around $435, then back up again, and then start oscillating like this. And we were not seeing anything in the spot market. When we reached the 17th, 18th of June, we started to see the tradings coming back to the market, but with different levels for offers.
So we see prices going from $430 per tonne to $500 per tonne cfr. This is in the spot market. So no one exactly knows what's happening.
Everyone's a little concerned what's going to happen from the buying side. The concern is that they purchase now at this price, and then in a couple of days, everything calms down, and then they will have paid a high price. And the sellers are concerned that they start selling at this price, and the conflict escalates, and this price is no longer a reality.
They could have been selling higher. So everyone's a little concerned at the moment. There's a lot of speculation in the market.
And, well, as you said, we are going to discuss the fertilizer purchases for 2025-2026. So when we think about the corn crop, this will definitely help to reduce liquidity so far in Brazil.
CF: So now that we've covered the Middle East, we can discuss what has already been happening here in Brazil regarding the pace of fertilizer purchases for the upcoming soybean crop.
GA: Camila, fertilizer purchases for 2025-2026 soybean crop are in line with 2024. We are talking about 60pc to 70pc of the needs already purchased, but this is likely below the average for the period of around 80pc.
When we divide this between the states, the most advanced one is Mato Grosso because it is the first one to start planting. It is the main producer of oilseeds and grains, so it starts planting first. It is common that it is advanced compared to other states. And then if we move to Parana state, that is the second biggest one in Brazil, we are talking about 70pc of the fertilizer needs already purchased.
CF: Segmenting this market, how is the purchasing pace for the different nutrients that farmers use in soybean plantations?
GA: Potash is the most advanced one. This is because the price was more attractive for farmers since last year.
If we go back to November 2024, early November, we had a price of around $285 per tonne cfr for MOP, which is 55pc below the price of MAP that was around $60-$35 per tonne at the moment. If we put this in dollar terms, we are talking about $355 per tonne of a difference of the spread between MAP and MOP.
This motivated farmers to go to look for MOP instead of phosphates. When we look for phosphates, there is low availability, prices are higher than the farmers expected, so they tended to postpone their purchases as much as they could, and they continue to do it.
CF: We have been seeing low availability and rising prices for phosphates. How is this affecting the market?
GA: Camila, we are seeing just a few suppliers to Brazil. Basically, there are two that are the main ones when we talk about MAP.
And when we look to the other phosphates, the suppliers are seeking for better netbacks, so they tend to send their ships to other regions instead of Brazil because of the prices. If we talk about MAP, prices were stable since mid-September 2024 until almost late February 2025 at $635 per tonne cfr Brazil.
And farmers were expecting a drop in prices, but instead they saw a sharp increase that made prices go up to $725 per tonne by the end of May. The same happened for TSP or triple, that is another source of P205 with high content. We are talking about prices in late February at $503 per tonne cfr Brazil, going up to $585 per tonne by late May.
Prices increased in an upward trend.
CF: Talking about China now specifically, there have been a lot of changes in the phosphates market in China. How is this impacting the market?
GA: Yes, China has been releasing a lot of new rules since mid-May. Since 2024, we have not seen exports of MAP or DAP from China, not only to Brazil but for all the markets.
This made the global market for high content phosphates slightly tighter. And then at the end of May, they returned the market with these two fertilizers, but with quotas. There is a specific amount of the fertilizer that they can export.
But at the same time, we need to remember that the window for shipment and delivery in Brazil and delivery at farms or at blending units means that the Chinese product may not attend most of the main regions that are producing regions. In Mato Grosso or in Parana, many regions cannot use the Chinese product because it would arrive at the farms later than the planting. This does not actually help the Brazilian market.
And at the same time, there are other two factors that hamper the market in Brazil. The first one is that the farmers were looking for the NP0840 plus five of sulphur to supplement the phosphate needs, so instead of buying MAP or TSP, they are looking for these two, but China suspended the emission of the CIQ — the inspections clearance for NPs and NPS.
So, they cannot export this anymore. Only the ones that already have this license approved can export. We still have some offers in the market, but new emissions are suspended. And in the same week, they announced that the SSP and TSP CIQ period would extend from 10 to at least 60 working days. This means that these two first lines would not arrive before August or September, and it would also not attend the fertilizer needs in Brazil.
Basically, we cannot actually count on China to relieve the pressure on phosphates.
CF: Moving on to the corn crop, how is the pace of fertilizer purchases?
GA: Fertilizer purchases for corn 2025-2026 are at around 25pc which is in line with 2024. We need to remember that we have two crops, one start planting in September in the same period as the soybeans and the other one we start planting in 2026.
When we divide this again per state, we have Mato Grosso as the most advanced one with 45pc of the fertilizer needs already purchased, which is expected as it is the first one to start planting. And we have the other states at around 10pc of the needs purchased so far.
Most of these purchases is ammonium sulphate — compacted ammonium sulphate. If we go back again to 2024, in the early December, we have a price of around $155 per tonne cfr Brazil, which was the lowest level since April 2024 and was also the lowest level for the first week of December ever registered in Argus historical data that started in September 2014. It was very attractive to farmers. They start buying even for delivery in the second semester of 2025.
CF: To wrap up, could you talk about soybean and corn price trends and barter rates between nutrients and these commodities?
GA: Sure. But let us remember, urea prices rose $25 per tonne since the early January, MOP $58 per tonne and MAP $90 per tonne. This is from January to late May. In the same period, soybean prices fell around R$20 per 60kg bag and corn around R11 per 60kg bag.
It was a double unfavourable moment for farmers. When we talk about barter rates, if we look to soybeans, the barter rate went up to 23.8 bags per tonne. This is around six bags above last year and also above the average of the last five years. When we look at corn, barter rates fell one bag per tonne to 60.5 bags per tonne compared to last year.
But this is still nine bags per tonne above the average of the last five years. That is a problem for farmers. The thing is that they need to purchase the last volumes for the crops before planting. They need to ramp up the purchases in the next weeks.
CF: Thank you very much, Gisele. Argus will monitor the evolution of nutrient demand and crop progress in Brazil throughout the year. Of course, we will bring Gisele back to share updates with our listeners. Thank you for tuning into our podcast.
Other episodes of Market Talks are available on argusmedia.com and on major streaming platforms. We will be back soon with another edition. See you next time.
