Climate conditions in Argentina and their impact on 2024-25 oilseed and grain crop output are expected to set the course for investments in fertilizers for the next season.
Reduced liquidity prevails in Argentina, as the country is now in its off-season for fertilizer purchases. Wheat planting starts in May in main producing areas, while the first corn crop starts in September. One-off demand emerging for nitrogen has been covered by domestic production, according to market participants that operate in the region.
Despite the reduced activity, granular urea in the domestic market has been firming, following the international market trend. Prices in the domestic market are referenced at $450/metric tonne (t) cfr equivalent, while Argus assessed granular urea at $445-455/t cfr Argentina on 13 February.
Investments for fertilizers to be applied during the 2025-26 season are still uncertain in Argentina, as it faces unfavorable weather conditions because of the La Nina weather phenomenon, which may hamper farmers' profitability.
Fertilizer usage in Argentina increased by 7pc to 4.9mn t in 2024 from the previous year, according to preliminary data from fertilizer association Fertilizar. That is the highest volume since 2021, when fertilizer usage reached a record high of 5.6mn t.
Hydric stress lowers outlook for corn
Corn planting finished in Argentina as of 13 February, while crop conditions continue to deteriorate because of extremely dry weather. Areas rated of good quality total only 16pc of the sowed area this cycle, falling by 49 percentage points from two months ago, according to the Buenos Aires Grain Exchange (Bage).
Areas sowed in October-November are likely to have suffered the most from the drought, as they reached their reproductive stages when weather conditions were most dire. Recent rainfall received by some Argentinian areas was not enough to reverse previous losses, while favoring crop development of later crops.
Hydric stress caused production outlooks for the 2024-25 corn crop to decrease by 1mn t in February, according to Bage and the US Department of Agriculture (USDA). Bage and USDA now project volumes to total 49mn t and 50mn t, respectively.
The reductions are curbed by planted area expansions of 300,000 hectares (ha) to 6.6mn ha in December, according to Bage, which has revised its acreage outlook upwards based on decisions from farmers to plant less soybean this season because of tight margins.
Further downward revisions are likely to come in the next months, as the areas that were most affected by the lack of soil moisture are harvested, according to market participants.
But farmers' profitability could still be high this season, as the global market is expected to face a supply shortage this year. USDA projects that global demand will surpass world production by 25mn t, boosting prices worldwide amid higher competition for the grain from major importers and domestic industries from key producers.
Despite La Nina-related losses, Argentina is still the third largest corn exporter, behind only Brazil and the US.
Fertilizer usage up in 2024
The increase of fertilizer usage in 2024 from 2023 reflects a 5pc increase in 2024-25 wheat acreage area from the previous season, reaching 6.3mn ha, according to Bage.
Despite the corn area's nearly 17pc decrease to 6.6mn ha from 7.9mn ha, fertilizer usage for corn also increased in 2024, Fertilizar said. Farmers opted to plant the first corn crop instead of the second corn crop, which forced producers to invest in technology to plant, including fertilizer usage. The second corn crop is usually planted in December, when hot and dry weather conditions favor the development of leafhoppers. The decision came after Argentinian farmers struggled with the occurrence of leafhoppers in 2023, which hampered production.
Granular urea imports increased by nearly 31pc to 1.1mn t in 2024 from a year prior, with Nigeria and Algeria accounting for 27pc and 25pc, respectively. Urea from Egypt significantly decreased its market share in 2024, representing almost 7pc of deliveries from 44pc in 2023. Egypt and Argentina have a free trade agreement that exempts some Egyptian products from tariffs. Imports from the country were significant until June and peaked in April at 34,225t, according to data from Global Trade Tracker (GTT). But the country provided zero volumes in July-November and sent only 4,400t to Argentina in December.
The reduction of Egypt's market share came because of the Argentinian government's decision in early May to eliminate import tariffs of 5.4pc on urea and 3.6pc on UAN, making nitrogen-based fertilizers from other origins more competitive.
