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Russia-Ukraine conflict impact on Brazilian agribusiness

AgroBravo corn cultivation in brazil
Second-crop corn cultivation in Brazilian Midwest region by Luiz Gustavo Denardin.
How the war is affecting exports, imports and fertilizer prices and supplies around world.

The Brazilian agribusiness has suffered the consequences of the conflict between Russia and Ukraine, with regard to exports, imports and the production cost of some commodities. The rise in the price of fertilizers, oil and its derivatives are the most visible effects.

Fertilizer

Regarding fertilizer imports, the Brazilian Midwest imported a volume 12.5% lower than the same period in 2021. This is mainly due to the price of fertilizer, where the value per ton increased from US$231.05/ton to US$524.42/ton in one year. Fertilizer had already been trading at high levels since 2021 and was boosted by the conflict in Ukraine.

Fuel

In a scenario of high production costs, considering the current fertilizer and pesticide prices, the increase in fuel prices is another factor that may limit farmers' margins throughout 2022. In the Brazilian mid-west, the price of diesel increased the cost of production of 2nd-crop corn by an average of 68% from 2021 to 2022.

Prices of products and byproducts of soybean and corn

On the other hand, exports were also affected, as is the case of soybean oil, which showed a 212% increase in the exports in the first quarter of 2022 compared to the same period last year. According to the Agro-Economic Alliance's 1st Quarterly Report 2022, this increase is mainly due to increased imports by India, a country that has been searching for new suppliers to decrease its dependence on Ukrainian sunflower oil.

Cereal and oilseed prices have also increased in Brazil, mainly due to the war. The fact that Ukraine is a major exporter of corn has generated uncertainty about the supply of the grain, opening opportunities for Brazil. In addition, because the Ukrainians are important suppliers of sunflower oil, the conflicts in Eastern Europe have increased the demand for other oils, such as soybean oil, increasing the prices of the grain.

For the coming months, in view of the points exposed, the tendency is that the soybean and corn bag will continue at high levels in the Brazilian Midwest region, and a factor that can pressure prices is the devaluation of the dollar.

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