3 Factors influencing the future of Brazilian ag — From Iran war to El Niño impacts

After years of expansion, Brazil’s agriculture sector is bracing for surging headwinds – Iran wars impact, slower acreage growth, and weather events – which will shape the future of one of the largest ag markets.

Brazil’s ag industry is exposed to Iran war impacts as the South American country imported nearly 88% of its fertilizer in 2025, according to industry estimates.

Various projects aim to boost Brazil’s domestic fertilizer production, including Brazil Potash’s plan to open a mine in the Amazonas state and Petrobas is committing to supplying the country with 35% of the nation’s fertilizer demand. However, these projects will take time to get boost domestic production.

During the start of Russia-Ukraine war, Brazilian farmers were able to forgo phosphate applications, “which is the easiest one for a farmer to skip,” explained Marina Cavalcante, agriculture analyst, Brazil, Bloomberg Intelligence, during a May 20 webinar. However, farmers cannot as easily skip nitrogen, she added.

“The way that fertilizer prices have increased in Brazil has affected affordability more because commodity prices are not as high as they were, for example, ... during the [start of the] Russia and Ukraine war. So, what this means [is] that this following season’s fertilizer application could be reduced,” Cavalcante elaborated.

Due to higher fertilizer prices, Brazil is expected to reduce soybean acreage this year with corn to follow, Cavalcante explained. The rising input costs and lower commodity prices are pinching farming margins as some banks see record high delinquencies, she added.

The Iran war is not just impacting fertilizer prices, but the conflict is also driving up fuel costs and by extension freight rates — a major portion of production and selling costs — she explained. However, Brazil’s biofuel and meat industries could offer avenues to boost domestic consumption, she added.

“Soybean meal and the soybean oil that is going to come from our crush needs here in Brazil are going to propel some internal industries here because we are not only talking about exporting grains and producing to export grains, but gaining competitiveness on producing our own pool of biofuels, maybe that’s biodiesel coming from soybean oil with very with competitive prices, and maybe this is generating more meal for our meatpacker producers,” she elaborated.

What El Niño, La Nina could mean for growing seasons?

Beyond geopolitical events, Brazil ag sector could feel impacts from the upcoming El Niño season. While weather is not always a predictor of yields, the El Niño and La Nina seasons are often associated with specific yield patterns, Yoav Sharaby, Agronomic Crop Modeler at SatYield, explained during the webinar.

“Usually during an El Niño season, the yields of the southern and northern states in Brazil are high, and the central states of Brazil, such as Mato Grosso, Mato Grosso du Sul, Goiás, [are] reduced, and this is something we saw in previous seasons. ... During La Nina season, it’s exactly the other way around,” he elaborated.