Fertilizer imports rise in the Northern Arc

The ports of the Northern Arc increased their share of fertilizer imports in the first half of 2024, strengthening the region's expansion in the movement of nutrients and its position as an important shipping hub for Brazilian farmers.

Brazil imported 17,8 million tonnes (t) of fertilizers between January and June, according to the Secretariat of Foreign Trade (Secex). The ports of the Northern Arc, an infrastructure network around mainly seven ports in the North and Northeast that provides more direct access to grain producers in the interior, received 3,7 million t - or 20,5pc of the imported volume - an increase of approximately 860.000t compared to the same period in 2023.

Fertilizer movement at the ports of the Northern Arc more than doubled in five years. The ports received 1,5 million tons of fertilizer in 2020, increasing to 1,9 million tons in 2021. Volumes rose to 2,7 million tons in 2022 and totaled 2,8 million tons in 2023.

The increase in the volume of fertilizers is related to the greater quantity of soybeans and corn that continue to be exported through the region's ports. When grains and oilseeds are unloaded at the ports and when there is fertilizer cargo on the return leg, freight rates decrease due to better return freight conditions. Therefore, importing fertilizers through the ports of the Northern Arc helps to reduce logistics costs.

When drivers have return cargo, it is possible to charge lower freight rates. In the opposite situation, when there is no return cargo, the freight rate increases, as traveling with an empty vehicle is not ideal and contributes to the depreciation of trucks.

In the case of corn, although absolute volumes have decreased, the market share of the Northern Arc ports has increased.

Brazil exported 8,4 million tonnes of corn in the first half of 2024, down from 11,6 million tonnes in the same period in 2023, according to the Ministry of Development, Industry, Trade and Services (MDIC). Northern Arc ports exported 4,1 million tonnes – or 49pc of the total – in the first half of this year and 4,3 million tonnes – 36,9pc of the total – in the same six months of 2023.

By comparison, the port of Santos in São Paulo state shipped 2,3m t in 2024 – a 27pc share – and 2,8m t in 2023, around 24pc of 2023 volumes.

Argus monitors road freight rates on routes to the Northern Arc, following the region's growing relevance for the country's logistics. In June, grain freight from Mato Grosso, on the Sinop-Miritituba route, reached R$278/t, the same level recorded in the same period in 2023. Fertilizer freight on the Miritituba-Sinop return route was R$143/t this year, up from R$137/t last year. 

Drought raises concerns

Although the first half of 2024 did not have major logistical problems, the outlook for the rest of the year is worrying, due to the La Niña climate phenomenon, which is expected to generate a drier climate than usual in the Northern Arc region.

The drought contributes to reducing river levels in the North and affects the movement of cargo.

The Tapajós, Madeira and Negro rivers, which flow into the Amazon River and then flow into the Atlantic Ocean, suffered a severe drought between May and December 2023, reducing water levels and preventing barge navigation. This hampered cargo movement in the region, especially in the ports of Pará and Amazonas.

River droughts could be even more severe in 2024. The Amazon dry season will be the most severe in 20 years, with the region facing extreme weather conditions, increasing the frequency and intensity of fires, according to the federal government. This situation should lead to a redirection of grain and fertilizer cargoes in the coming months, causing them to be diverted to Itaqui and other ports in the South and Southeast of Brazil.