Fertilizer issues threaten South American soybean crops

Disruptions in Black Sea potash exports will have little impact in the near-term but could play a significant role in determining the fate of South America’s next soybean crop, according to a report by RaboResearch.

All overseas flow of fertilizer for the spring season in the Northern Hemisphere has already taken place. Movement is now at the local level from ports to inland distribution outlets.

So, the first major crop-growing regions to be at risk of fertilizer shortages will be India and Latin America.

“India is partially out of danger but Latin America is highly exposed,” said the report.

Russia’s war in Ukraine and subsequent international sanctions are constraining nitrogen and potash fertilizer shipments from the Black Sea region.

Russia and Belarus account for 40 percent of global potash exports.

India is preparing to plant its kharif crop in June. The country was able to secure its immediate potash needs from Canada but it will have to buy more in coming months.

“Brazil’s 2023 soybean harvest might be the first crop to experience direct negative impacts from Russia’s war in Ukraine,” said the report.

Brazil’s main soybean season starts in September. Potash is the most crucial nutrient for that crop and Brazil is the world’s biggest potash importer, bringing in about 12 million tonnes per year.

The country usually sources 40 percent of its supplies from Russia and Belarus.

“A strict ban on potash sales by Russia and Belarus could put downward pressure on yields,” said RaboResearch.

That would put further pressure on the already tight global vegetable oil market.

Under the complete ban scenario, Brazil would have about three months to replace about five million tonnes of imported potash from the Black Sea region.

Farmers would be forced to import more from Canada and Israel, reduce application rates or use alternative biofertilizers.

Canada’s Nutrien, the world’s largest potash producer, has already announced it intends to increase production.

Farmers in North America, who typically use about 10 million tonnes of potash per year, may cut back on application rates due to high prices, making more product available for Brazil, so the circumstance is far from hopeless.

“However, the situation is fragile and we have to allow for the unexpected,” said RaboResearch.

Brazil imported 10.43 million tonnes of fertilizer in the first quarter of 2022, a 27 percent increase over the previous year as importers scrambled to secure supply.

Russia, China and Canada were the top three suppliers for those three months.

An estimated 547,000 tonnes of Russian fertilizer are expected to arrive in Brazil in April, including 365,400 tonnes that left Russia after the war began, according to Agrinvest Commodities.

Clearly some Black Sea fertilizer is still making its way to Brazil despite international sanctions and logistics problems.

However, there have been fewer Russian fertilizer deals of late, suggesting there could be some reduction in supplies.

MacroSector, a Brazilian agriculture consultancy, is forecasting that the country’s fertilizer use will fall eight percent to 42.18 million tonnes in 2022.

Tags: exports, RaboResearch, soybean crop, Belarus, Black Sea, South America, ports, potash, disruptions, fertilizer, Ukraine, shortages, Russia, imported