Trade surplus hits $7bn, down 20% year-on-year, as imports outpace exports
12/06/2024
Oil has set a new record in export value for the year through November, becoming Brazil’s top exported product for the first time since the country began tracking trade balance data in 1997. The export of the commodity totaled $42.76 billion over the first 11 months of 2024, marking a 9.5% increase compared to the same period last year.
Brazil’s overall trade balance recorded a surplus of $7.03 billion in November, a result 20% lower than the same month last year. Exports reached $28.02 billion, a growth of 0.5%, while imports hit $20.99 billion, an increase of 9.9%. For the year to date, the surplus stood at $69.86 billion, reflecting a 22% drop compared to the same period in 2023. Exports totaled $312.27 billion, a rise of 0.4%, whereas imports amounted to $242.41 billion, up 9.5%. The Secretariat of Foreign Trade (SECEX) projects a trade surplus of $70.4 billion for the year.
Herlon Brandão, director of statistics and foreign trade studies at the Ministry of Development, Industry, Trade and Services (MDIC), stated on Thursday (5) that the export of goods in November and year-to-date set records for both periods. He emphasized that the increase was driven by volume rather than price hikes.
SECEX data indicates that the volume shipped from January to November rose by 4.2%, with a 3.6% decrease in average prices compared to the same period in 2023. In terms of imports, the volume grew more rapidly, but the decline in average prices lessened the impact on the trade balance. Over the same 11-month span, the volume of imports increased by 18.1%, while average prices fell by 7.4%.
Soybeans, which led Brazilian exports in 2023, fell to second place. The export of this grain totaled $42.08 billion through November, a 17.9% decline from the same months in 2023. Iron ore ranked third, totaling $27.64 billion with a 2% increase over the same timeframe, according to data released on Thursday by SECEX/MDIC.
Oil is expected to end 2024 as Brazil’s leading export, as the shipment of soybeans is winding down due to seasonal harvest factors. According to SECEX data, the daily average export of soybeans in November was $58.56 million, while oil averaged $238.22 million.
This performance increased oil’s share of Brazil’s total exports from 12.6% in 2023 to 13.7% in 2024, while soybeans’ share dropped from 16.5% to 13.5%, from January to November. The two commodities exhibited varying trends in export volumes and sales prices. Oil experienced a 4.3% drop in average prices in 2024, but the 14.4% increase in export volume offset the price decline. Soybeans, on the other hand, saw a larger decrease in average price, falling 16.9%, and the volume shipped also decreased by 1.3%.
The lower volume of soybean exports is attributed to a reduced harvest. According to the latest data from the National Supply Company (CONAB), there was a 7.23 million-tonne decrease in the total soybean harvest for the 2023/2024 season compared to the previous period. Brazilian oil production also hit a record in 2023. As of October 2024, production is 0.3% higher than during the same period last year, according to the latest data from the National Petroleum Agency (ANP).
José Augusto de Castro, president of the Brazilian Foreign Trade Association (AEB), suggests that soybeans may reclaim their top export status in 2025, as initial sector estimates for next year’s harvest indicate the potential for a new record in production. However, he cautions that projections can change and there are concerns about possible climate impacts.
Welber Barral, partner at BMJ and former secretary of foreign trade, notes that the decline in prices is heavily influenced by China, which, along with Hong Kong and Macau, accounted for 24.5% of Brazil’s imports from January to November. Mr. Barral explains that China has been lowering prices to offload products in various markets, including Brazil, amid an oversupply and facing protectionist measures.
Mr. Barral adds that the depreciation of the Brazilian real against the dollar in recent times is unlikely to proportionally reduce Brazilian imports. This is due, he points out, to the necessity of importing certain industrial inputs regardless of the exchange rate. “Moreover, the depreciated exchange rate sometimes leads to price negotiations between importers and suppliers.”
Mr. Barral highlights other factors that could affect prices starting in 2025, including the election of Donald Trump as president of the United States. Protectionist measures from the U.S. government could slow down global trade, potentially contributing to a reduction in international average prices. Depending on the sectors impacted by potential protectionist measures, there could also be shifts in export flows, altering global trade dynamics.
- By Estevão Taiar e Marta Watanabe
- Source: Valor Inaternational
- https://valorinternational.globo.com/