Largest supplier of fertilizer to Brazil, Russia suspends ammonium nitrate supplies

RIO DE JANEIRO, BRAZIL – Russia yesterday (2) suspended its exports of ammonium nitrate (NAM), a nitrogen fertilizer, of which the Russians are virtually the sole Brazilian supplier.

Last year, Brazil imported 1.3 million tons of this fertilizer, almost all of which was supplied by Russia. The suspension is valid until April 1 of this year.

The decision to completely cut off supplies of the product is another step in a series of export restriction measures announced by the Russian government for the end of 2021.

Last November, the country had said it would restrict its fertilizer supplies to ensure supplies for domestic farmers. As part of these measures, Russia set export quotas for nitrogen and phosphates that would apply for at least six months starting in December 2021.

According to StoneX, the quota of 745,000 tons of NAM already represents a 58% reduction compared to the shipment volumes recorded between December 2020 and May 2021.

“Since Brazil imports practically 100% from there, we would have to take 70% of the established quota to maintain the same import volume,” the consultancy said in a report.

Following the announcement of the restrictions, Agriculture Minister Tereza Cristina, during a visit to Moscow, assured that she had received guarantees from Russian business people and executives that exports to Brazil would not be restricted.

The minister’s team said they trusted the word of Russian business people and did not believe there would be any interruption in sales to the Brazilian market during these two months. “They guaranteed not only delivery but also an increase in deliveries to Brazil,” said an official of the minister.

The Russian company Acron, which sold 762.9 thousand tons of the raw material to Brazilian producers in 2021, said during the visit of the Brazilian delegation to Russia that it would increase its deliveries by 10%.

The company also showed interest in acquiring assets of Petrobras’ nitrogen fertilizer unit in Mato Grosso do Sul.

Russian Minister of Economic Development Maksim Reshetnikov assured the Brazilian delegation that supplies of potassium and phosphate fertilizers to Brazil would be maintained.

The Russian decision to suspend deliveries was made to ensure the supply of mineral fertilizers to Brazilian farmers who will begin fieldwork in the spring. It is expected that sales will normalize from April 2.

According to Marcelo Mello, director of fertilizers at StoneX, the problem was already serious at the end of the year when the quotas were announced. “The tightening of the measure worsens the scenario for this product and reinforces our expectation of a high risk of NAM shortage in Brazil and the international market,” he says.

The nutrient is widely used in formulas and is commonly applied in sugarcane and coffee plantations. Mello explains that despite difficulties in obtaining the product, which may occur in the first half of the year, “no one will die.” Ammonium nitrate can be replaced by urea, for example.