Fertilizer Purchasing Power Index for June improves compared to the previous month

The average price of fertilizers fell in June, causing an improvement in the Fertilizer Purchasing Power Index (IPCF), which closed at 1,69, a reduction in relation to May (1,75) and April (1,87). This is due to a greater balance in the world supply and demand balance and also the Brazilian market, which in the first half of the year prepared itself to guarantee inputs and reduce the risks of shortages due to geopolitical reasons.  

In addition to the drop in the average price of fertilizers, another factor that generated an improvement in the June IPCF was the reduction in the average price of commodities of soybeans and corn, caused by the increase in planted area in the United States and the fear of economic recession.

During the period, the index was also impacted by the drop in the price of sugar cane and the Proposed Amendment to the Constitution (PEC) on Fuels, which could increase the price of ethanol and harm the competitiveness of the fuel in Brazil. The devalued Real, another factor considered in the composition of the IPCF, also contributed to the improvement in the June index.

The index is released monthly by Mosaic Fertilizers, one of the largest global producers of combined phosphates and potassium. The index consists of the relationship between fertilizer and agricultural commodity price indicators.

Understanding the IPCF

The IPCF is released monthly and consists of the relationship between fertilizer and agricultural commodity price indicators. A ratio less than 1,0 indicates that fertilizers are more affordable than in the same period in 2017, and a ratio greater than 1,00 means that fertilizers are less affordable compared to the same period. The IPCF calculation takes into account the main Brazilian crops: soybeans, corn, sugar, ethanol and cotton.