Brazil’s Fertilizer Market

Vale’s acquisition to reduce anxiety over fertilizers in Brazil

News of Vale’s acquisition of a majority stage in Fosfertil has been generally received well by Vale investors. Most seem to have forgotten that Vale sold its shares in Fosfertil a few years back before the price spikes. The acquisition will deliver access to vital domestic supplies of superphosphates for a high consumption market. The investment case is considered extremely strong. Rumours of a Brazilian nationalised fertiliser company have been rife throughout the Brazilian farming community for the last couple of years. Vale taking a majority stake in Fosfertil will do much to calm political nerves as a major domestic fertilizer provider is back in Brazilian hands. Arable farming margins in Brazil have improved since the time of extreme high fertilizer prices in 2007 & 2008. Fertilizer price spikes are unlikely to repeat them selves in the short term but a steady increase is realistic and palatable.

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