Brazil continues to receive Russian fertilizer, despite the war

RIO DE JANEIRO, BRAZIL – Even after nearly 50 days of the war in Ukraine, which has affected fertilizer exports from Russia, fertilizer shipments to Brazil continue. A StoneX survey shows that as of April 4, there were 600,000 tons of Russian fertilizer – of which it was 50% potash – on its way to Brazilian ports.

The consultancy prepared the report based on consultations with maritime agencies about the schedule of the ships.

The volume is significant, even though it has decreased compared to what was on the move a few days earlier. On March 18, the ships’ schedules informed that 860,000 tons of fertilizer from Russia were at sea heading to Brazil, a reduction that indicates interruptions in the flow of transport.

“If the ships at the tip were being loaded normally, this volume would at least be maintained, but it went backwards,” comments Marcelo Mello, StoneX’s fertilizer director. The consultancy will do a new survey only at the end of this month.

Russia is one of the largest global suppliers of fertilizers. The economic sanctions that the West imposed on Russia after its military operation in Ukraine in February do not prohibit the importation of Russian fertilizer. Still, the conflict brings headaches to the segment on at least two fronts: payments and logistics.

Between March 20 and April 13, six ships with fertilizer from Russia docked at the port of Santos in São Paulo State. The Paranaguá terminal (Paraná State), the largest gateway for fertilizers in Brazil, received another four ships containing over 100,000 tons of nutrients from Russia, including potassium, urea, and MAP.

For this month, the management of Portos do Paraná expects six more ships with Russian cargo – between those already waiting in line to unload and those that are on their way – to deliver about 150,000 more tons.

“The total volume received (not just from Russia) grew 26% in the first quarter of this year,” says Luiz Fernando Garcia da Silva, CEO of Portos do Paraná, who compared the same period in 2021.

The growth of imports via Paraná ports results from a movement of anticipation of purchases that began at the end of last year, when Belarus, another important supplier of potash, suffered economic sanctions from the United States and the European Union.

With the war, the transportation flow is under the scrutiny of the agents, who already expect that the mid-year logistic knot in Brazil, common in the country at this time, will be even worse in 2022. The difference is that this time, with the delay of part of the cargo that will arrive by sea, the problems will not be specific, believes Mello.

The attention is now turned to the shipments that occur in March and April when Brazil intensifies imports to meet the demand of the summer crop (2022/23), which begins being planted in September.

Despite the challenging scenario in 2022, Mello says that the problem will not make the next harvest unfeasible – which, if the weather helps, should be “large”. “But it is difficult that the planted area will increase in the next cycle,” he says.

Russia supplied 22% of the 39 million tons of fertilizers that Brazil imported last year, in a list that includes urea (nitrogenous), MAP (phosphate), ammonium nitrate, and potassium. For the last two, StoneX projects shortages in 2022.

Ammonium nitrate can be replaced by urea, but potash farmers have no other option. “The situation can be neutralized if there is rational use in planting,” evaluates Mello. The consultancy believes that the supply of potash will be between 25% and 30% below demand.