Pesticide prices may rise with coronavirus outbreak

The coronavirus outbreak's impact on logistics within the top pesticide feedstock producer, China, is raising concern about Brazil's access to pesticides supply.

In 2019 China supplied 38pc of all Brazilian pesticide demand, said Brazilian bank Itau BBA. Brazilian dependence on China is even more concentrated for herbicides, with China supplying 99pc of Brazil's Glyphosate and Imazaquim demand. For Paraquate, another herbicide, Chinese accounted for 97pc of Brazilian demand in 2019.

The Chinese government has instructed local road transportation authorities to assist agriculture-related sectors — a directive that helps Chinese industry continue to operate. And for Brazil the Chinese imports do not typically spike until May-October.

But if the coronavirus outbreak continues into the coming months and further transportation interruptions occur, the Brazilian industry could see more significant supply disruption for agricultural chemicals, which may lead to higher prices for such inputs.

China's industrial activity has slowed since the start of the coronavirus outbreak. Official purchasing managers index (PMI) for the manufacturing sector dropped to a record low in February. The manufacturing PMI plunged to 35.7 last month, versus 50.0 in January and the previous record low of 38.8 in November 2008 amid the global financial crisis. A reading below 50 indicates contraction.

By Kauanna Navarro