Brazil’s fertilizer market is predicted to stagnate for another season. Stagnation, according to analysts, only stresses the importance of mergers in underpinning the profitability of the nutrient sector. The country’s fertilizer consumption will likely also stagnate at around 32.2 million tons this year, which will be for the first time in half a decade that it has not grown. This year’s forecast reflects the expectations of a minor fall in Brazilian crop plantings in 2015-2016, marking the first decline in about five years.
According to Dalton Carlos Heringer, CEO of Fertilizantes Heringer, which has about a 17-percent share of the Brazilian market, “the current outlook is for a similar (fertilizer) delivery in 2015 to what was delivered in 2014 with a slight reduction in the planted area.” Mr Heringer, however, did not comment further on the forecast that predicts an interruption in the long-term trend of growing fertilizer use. Brazil’s fertilizer consumption has gone up by a factor of three over the past 20 years.
Nevertheless, Mr Heringer said that the process of consolidation of the Brazilian fertilizer market is underway which has been underscored by the $750 million purchase of Bunge’s fertilizer assets by Yara International two years ago and the last year’s acquisition of Archer Daniels Midland’s nutrient distribution business in Brazil and Paraguay by Mosaic. In his opinion, all these mergers and acquisitions bring more discipline to the market. This year, Fertilizantes Heringer itself had finalized a R$145.4 million investment from a Moroccan phosphate giant, which has obtained a 10-percent stake in the company. At the same time, Canada’s PotashCorp has also recently agreed to buy 9.5 percent of Fertilizantes Heringer from controlling shareholders.