Farmers in Brazil's Mato Grosso state are likely to step up last-minute demand for corn fertilizer early next year, even as barter rates for corn may vary little from December levels.
Prices of nitrogen-based fertilizers may increase in early January, amid greater demand, but barter rates — which reflect the ratio of bags of a commodity per tonne of fertilizer — should vary little, given an uptick in grain prices.
Corn prices showed an upward trend in Mato Grosso state, in Brazil's center west, in late 2023, amid higher demand from ethanol mills.
Barter rates edged lower in early December in the Mato Grossocities monitored by Argus, as domestic grain prices rose faster than NPKprices.
Farmers delayed purchases of nitrogen, mainly urea, for the second harvest of Brazil's 2023-2024 corn crop — the main season for the grain — as they expected a downward trend in urea prices.
The slow pace of forward sales and the influence of the El Niño weather phenomenon, which caused a drought in the region, generated uncertainty and squeezed investments.
The fertilizers needed for the corn cycle usually are negotiated in the import market byNovember. But farmers this year postponed purchases on the domestic market. Brazil's granular urea imports this year through November totaled 6.3 metric tonnes (t), down from nearly 6.5mn t in the same period in 2022.
That may prompt sellers to increase prices in early January as farmers catch up on purchases.
At the same time, the volume of nutrients delivered from January through September suggests an average NPK blend of 12-14-17, according to estimates from Brazil's fertilizer industry union Siacesp. That compares with an average NPK blend of 14-14-17 delivered in 2022, according to Brazil's national fertilizer distributors' association Anda. This means deliveries averaged 12pc nitrogen this year, down from 14pc in 2022.
Granular urea prices in Rondonopolis fell by around 32pc, or about $207/t, to $445/t fob in the week ended 21 December from a year earlier.
Corn prices are expected to show little change in the first quarter of 2024, as prices are currently at historically low levels. Prices decreased by an average of 38.8pc in Mato Grosso over the course of 2023. Levels in the domestic market were at R37.80/bag in Sorriso and R44.10/bag in Rondonopolis on 21 December. That compares with R64/bag in Sorriso and around R69/bag in Rondonopolis a year earlier.
Barter rates for corn in Mato Grosso state fluctuated in 2023, driven by NPK prices.Farmers postponed fertilizer purchases in that environment of higher NPK prices and falling grain prices to awaitbetter conditions to step up investments for the crop.
In the first half of 2023, barter rates for the grain reached their lowest of the year even with fertilizer prices at higher levels than usual for the period.
NPK prices started to rise after June, amid an open ideal purchase window. Between June-October fertilizer prices more than doubled, elevating barter rates to their highest levels of the year at 78.41 bags/t in Sorriso on 26 October, and 67.13 bags/t in Rondonopolis on 3 August. Fertilizer prices started to fall again on low demand and lagging fertilizer deals in late October.
Barter rates increased by 8.43 bags/t to 54.08 bags/t in Rondonopolis in the week ended 21 December from the last week in 2022, while barter rates in Sorriso rose by almost 13.69 bags/t to 63.89 bags/t in the same period.
Barter rates for soybeans
Barter rates for soybeans in the first quarter of 2024 may remain in line with current ranges, as market participants tend to await the beginning of harvesting activities to intensify negotiations.
Barter rates for soybean weregenerally stable in 2023. During the whole year, rates remained at around 15-19 bags/t in Mato Grosso with oilseed and fertilizer prices following the same trend.
Rates fell by 0.29 bag/t in Rondonopolis on the year, while in Sorriso barter rates decreased by around 0.48 bag/t in the same period.
The highest levels were reached in the week ended 4 May, at 18,06 bags/t in Rondonopolis and 18.06 bags/t in Sorriso.
