Fertilizer Purchasing Power Index improves in January

After seven consecutive months of growth, the Fertilizer Purchasing Power Index (IPCF) closed at 1,50 in January, a drop compared to December (1,69), returning to the levels of October last year. In practice, this means a more positive scenario for the acquisition of inputs by rural producers.

The main reasons for this improvement are the prices of agricultural commodities, especially soybeans, corn and cotton, which rose compared to last month due to crop failures announced after adverse weather events, mainly in the South region.

The average price of fertilizers fell in January, led mainly by nitrogen fertilizers, which have their sales window closing in Brazil and finding little support from other geographies. On the other hand, an adjustment was observed for potassium in the period and the market continues to observe the evolution of macroeconomic issues involving Belarus, in addition to the crisis between Russia and Ukraine. It is important to highlight that global demand, as well as in Brazil, remains strong. Combined with the factors mentioned, they support prices.

Despite the weather events, the profitability of the main crops in Brazil remains positive and there is optimism for the 2021/2022 harvest. The fourth estimate from the National Supply Company (Conab), released in January, points to growth in grain production compared to the 2020/21 season. According to the survey, Brazil should produce a total volume of 284,4 million tons, an increase of 12,5% ​​or 32 million tons.

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 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.