The Swiss agricultural input giant Syngenta boosted its production capacity of fungicide and seed corn in Brazil.
Syngenta invested a combined total of $240m in two facilities in Brazil, to produce fungicide and seed corn, as well as an expansion of herbicide capacity in Switzerland.
The completion of this capacity expansion signals confidence in Brazilian farmers spending abilities, as local high local-currency prices compensate for the scarcity of credit.
Syngenta is in the process of being acquired by ChemChina, with a decision by EU regulators on the $43bn takeover is expected this month.
Economic uncertainty
In a quarterly report earlier this year, Syngenta warned that "in Latin America, growers in Brazil continue to face economic uncertainty and credit constraints, although their underlying profitability remains robust".
Syngenta's expansion included a new facility in the state of Sao Paulo will produce the proprietary Elatus fungicide, in the form of dry water soluble granules for easy transportation.
Elatus sales in Latin America exceeded $400m in 2015, Syngenta said.
In the July report, Syngenta noted that the fungicide "continues to perform well against soybean rust in Brazil".
Strong second crop sowing
In Goias, Syngenta will quadruple seed corn capacity at a facility in Formosa.
"The site will raise its production capacity from 400,000 to 1.6m [60kg] bags of corn per year," Syngenta said.
In the latest set of quarterly reports, Syngenta noted that "seeds sales showed strong growth driven by second season corn in Brazil and by higher corn acreage in Argentina".
Rising domestic currency prices
Agricultural prices in Brazil have risen sharply over the last year, after weakness in the real spurred rapid early exports.
This, in combination with the smaller than expected corn harvest, actually lead to the unusual situation of US corn being exported to Brazil, in order to feed demand from the country's livestock industry.
Corn prices in Brazil, according to the agricultural think tank Cepea, stand at $13.09 a bag, about $5.55 a bushel, more than $2 a bushel above prices in Chicago.
Soybean prices are some $24.27 a bag, or 11.03 a bushel, compared to Chicago prices of about $9.70 a bushel.
And although the real has recovered somewhat from the highs of early 2016, local currency prices are even more impressive.
But the relative weakness of the real is also making imports more expensive, making crop inputs more expensive.
Farm spending recovers
Brazilian farm spending in the first half of the year was hampered by low access to credit, but input sellers have been turning more positive.
The Syngenta announcement comes on the eve of rival seed and input producer Monsanto's latest quarterly report.
Three months ago, Monsanto president Brett Bergemann struck an upbeat noted on Brazilian farmer spending.
"Buying in local currency and selling in US dollars is not a bad place for them," said Mr Bergemann, adding that he was "optimistic about Brazil right now with the position of the farmer and their ability to access credit and byproducts".
Fount: http://www.agrimoney.com/news/syngenta-bets-on-brazilian-farmer-spending--9996.html
Syngenta invested a combined total of $240m in two facilities in Brazil, to produce fungicide and seed corn, as well as an expansion of herbicide capacity in Switzerland.
The completion of this capacity expansion signals confidence in Brazilian farmers spending abilities, as local high local-currency prices compensate for the scarcity of credit.
Syngenta is in the process of being acquired by ChemChina, with a decision by EU regulators on the $43bn takeover is expected this month.
Economic uncertainty
In a quarterly report earlier this year, Syngenta warned that "in Latin America, growers in Brazil continue to face economic uncertainty and credit constraints, although their underlying profitability remains robust".
Syngenta's expansion included a new facility in the state of Sao Paulo will produce the proprietary Elatus fungicide, in the form of dry water soluble granules for easy transportation.
Elatus sales in Latin America exceeded $400m in 2015, Syngenta said.
In the July report, Syngenta noted that the fungicide "continues to perform well against soybean rust in Brazil".
Strong second crop sowing
In Goias, Syngenta will quadruple seed corn capacity at a facility in Formosa.
"The site will raise its production capacity from 400,000 to 1.6m [60kg] bags of corn per year," Syngenta said.
In the latest set of quarterly reports, Syngenta noted that "seeds sales showed strong growth driven by second season corn in Brazil and by higher corn acreage in Argentina".
Rising domestic currency prices
Agricultural prices in Brazil have risen sharply over the last year, after weakness in the real spurred rapid early exports.
This, in combination with the smaller than expected corn harvest, actually lead to the unusual situation of US corn being exported to Brazil, in order to feed demand from the country's livestock industry.
Corn prices in Brazil, according to the agricultural think tank Cepea, stand at $13.09 a bag, about $5.55 a bushel, more than $2 a bushel above prices in Chicago.
Soybean prices are some $24.27 a bag, or 11.03 a bushel, compared to Chicago prices of about $9.70 a bushel.
And although the real has recovered somewhat from the highs of early 2016, local currency prices are even more impressive.
But the relative weakness of the real is also making imports more expensive, making crop inputs more expensive.
Farm spending recovers
Brazilian farm spending in the first half of the year was hampered by low access to credit, but input sellers have been turning more positive.
The Syngenta announcement comes on the eve of rival seed and input producer Monsanto's latest quarterly report.
Three months ago, Monsanto president Brett Bergemann struck an upbeat noted on Brazilian farmer spending.
"Buying in local currency and selling in US dollars is not a bad place for them," said Mr Bergemann, adding that he was "optimistic about Brazil right now with the position of the farmer and their ability to access credit and byproducts".
Fount: http://www.agrimoney.com/news/syngenta-bets-on-brazilian-farmer-spending--9996.html
