b"North America, contrasting with the situa- We've just come out of a season tion in Brazil.where profit margins were tighter com-There's still an excess of inventorypared to previous years. So now, farmers lingering in the Brazilian market. Weare really focused on finding ways to cut anticipate that this inventory challengecosts for the upcoming season to regain might persist into the third quarter. Thissome of those margins, Fonseca says.predicament arises from a confluence ofIn this context, farmers are particularly factors: a surge in imports coinciding withworried about the cost of fertilizer since a downturn in commodity prices, leadingit makes up a significant portion of their to negative basis levels in certain areas.expenses. Theyre keen on reducing these These market dynamics have exertedcosts wherever possible. pressure on profit margins and damp- Given the current situation, were ened demand, resulting in the accumula- unlikely to see significant decreases in fer-tion of inventory. tilizer prices from where they stand now. Despite this, some companies thatThis makes it challenging for farmers who have significant exposure to the Brazilianare trying to manage their costs more market have struck a positive note in theireffectively for the next season.recent earnings reports. Taylor highlightsThe impact of North American or U.S.Sam Taylor is farm inputs analyst for FMC as an example. They've indicatedtariffs remains uncertain. Latin AmericaRabobank based in New York. strong top-line performance and sug- historically has been a fiercely competitive gested that inventory is moving moremarket for phosphates, with Moroccan swiftly than previously anticipated, Taylorsuppliers being particularly aggressive says.in their shipping volumes. Consequently, However, I still believe that inventorythere's a bias towards expecting down-levels will continue to exert downwardward pricing pressure, especially for major pressure on pricing within the chemistryphosphate products, Taylor adds.sector, especially in Brazil, potentiallyAs for nitrogen fertilizers, theres extending into the latter half of the year.a broader trend of falling cost curves, This situation is particularly challeng- ample availability, and weak demand, ing for farmers, as margins are currentlyparticularly evident in regions east of under strain.the Suez, Taylor adds. Indian demand The economic stress in Brazil appearsfor urea, a key nitrogen product, doesnt to be even more pronounced comparedseem to be robust, which implies that to the North American market, exacerbat- finding markets for nitrogen products ing the need for a resolution to the inven- might require some effort.Greg Stamp is a Canadian seed growertory imbalance. Overall sentiment leans towards aand farmer.slightly downward or range-bound trajec-The Fertilizer Situation tory. While affordability issues in the U.S. In the realm of fertilizers, there's still aand North American markets arent as prevailing downward pressure, particu- severe for growers compared to some larly noticeable in the potash sector.other regions, tighter margins suggest a Rabobank has observed some curtail- logical downward movement in prices, ment in Canadian production capacity,Taylor says. and both China and Brazil are showingThis could be seen as positive news strong inventory levels.for growers, as it makes essential prod-Coupled with a deteriorating marginucts more accessible while acknowledg-environment, this exerts a dampeninging the challenges posed by narrower effect on pricing, which can be beneficialprofit margins.for market dynamics, according to Taylor.Bruno Fonseca is agricultural inputsReasons for Optimismanalyst for Rabobank based in So Paulo.Looking ahead to the 2025 season, He says in Braziland throughout Latintheres optimism that input costs will Americafarmers are quite concernedlevel out more swiftly than in previous about fertilizer prices, especially as theyyears, providing some respite for farm- Bruno Fonseca is agricultural inputs analyst look ahead to the next crop season.ers. Despite ongoing bearish sentimentsfor Rabobank based in So Paulo.LATAMSEEDWORLD.COM /31"