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Covid-19 and the agricultural input market

Covid-19 has “infected” news all around the world, discouraging players. Measures taken by governments to limit the virus spreading have brought different consequences for the productive sector in Brazil. As for agribusiness, several events, such as weddings, congresses and parties, were canceled, affecting the flower segment. Family farmers, in turn, who have their revenue dependent on sales to schools and farmers’ markets, had difficulties to flow the production.


As for agricultural inputs, players are also uncertain. Activities at ports in some countries, such as in India, which is facing lockdown and is a major fertilizer consumer, have been interrupted. The United States, in turn, are normally loading inputs for the next season. In China, a big exporter of raw material, the situation has returned to normal in March/20, and, therefore, both supply and demand are unbalanced in global terms.


As for phosphated fertilizers, international prices started 2020 moving up. Considering monoammonium phosphate (MAP) quotes, in spite of increases in 2020, the average in the first four months this year was 21.6% lower compared to 2019.


Concerning urea, average prices have also upped from January to April this year in the international market; however, the average in the period is lower compared to that registered in the same period last year. As for potassium chloride, values downed both in the accumulated of the four first months of 2020 and on the average of the period.


In Brazil, the sharp devaluation of Real against dollar quotes has neutralized, in parts, the transference of international price drops to the domestic values. Moreover, the road freight to transport fertilizers has increased in Brazil.


Therefore, prices for urea and MAP moved up in Brazil, while potassium chloride values remained practically stable in the first four months of 2020. According to data from Cepea, urea prices rose 23% in the Central-West and 17% in the South in the first four months of 2020. Map prices upped 27% in the Central-West and 24% in the South from January to Aril 2020. Potassium chloride (KCl) values increased 1.6% in the Central-West, but downed 1.1% in the South.


Considering pesticides, quotes rose in the Central-West, but decreased in the South. The way players trade in both regions explains different price behaviors. In the Central-West, there are two forms to trade inputs: direct sales between the multinational company and producers and the negotiation between input stores and producers. In the South, the most common type of trade is between cooperatives and producers.


Soybean and corn account for a major part of the agricultural production in Brazil and, therefore, inputs prices are driven by the profitability of these crops. Therefore, producers are focused on the economic performance in Brazil, because they buy inputs influenced by the grains sector and need to sell in the domestic market. The weak economic growth that has been observed over the last years reduced both consumption and income. When economy has started to recover, coronavirus has interrupted the growth, and the fear is that the production is interrupted by lack of income, given that selling one crop finances the next one.

23/09/2020 - Influence of emotional factors caused by the coronavirus pandemic on cattle trades - Shirley Martins Menezes 23/09/2020 - Agribusiness, pandemics and the world economy - Geraldo Barros 16/09/2020 - Rice price increases bring relief to producers, but it does not cover losses over the last 5 crops - Mauro Osaki e Renato Garcia Ribeiro 03/09/2020 - Changes in consumption habits during quarantine may remain after social isolation - Fernanda Geraldini Palmieri 17/08/2020 - Covid-19 crisis affects cassava sector in different ways - Fábio Isaías Felipe 04/08/2020 - Rural Brazil: Covid-19, income and emergency aid - Nicole Rennó Castro and Geraldo Sant'Ana de Camargo Barros 28/07/2020 - Limited demand due to covid-19 presses down ethanol quotes, despite lower production - Ivelise Rasera Bragato Calcidoni 01/07/2020 - Blitzkrieg on agribusiness: what to expect? - Heloisa Lee Burnquist 30/06/2020 - Chinese purchases from Brazil create optimism and alerts - Thiago Bernardino de Carvalho 26/06/2020 - Covid-19: opportunities and challenges for the fruit and vegetable sector - Margarete Boteon 22/04/2020 - Agribusiness exports during coronavírus pandemic - Andreia de Oliveira Adami 17/04/2020 - Economic epidemiology in evidence - Sílvia Helena Galvão de Miranda 31/03/2020 - Family company survival depends on efficient succession - Gabriela Garcia Ribeiro 13/02/2020 - Risk of planting second crop reduces area use in South Brazil - Lucilio Rogerio Aparecido Alves 21/01/2020 - Attractiveness of cattle farming in Brazil - Thiago Bernardino de Carvalho

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