Oil leads the way as extractive industry drives trade surplus

Brazil’s trade balance closed with a surplus of $35.9 billion from January to May, a record for the period, boosted by the strong performance of the extractive sector, particularly oil.

In May, the trade surplus was $8.534 billion, 22.3% lower than the same month in 2023. Exports totaled $30.338 billion in May, down 7.1%, while imports reached $21.804 billion, a slight increase of 0.5%.

There was an increase in the value of both exports and imports in the first five months of the year, driven by higher export and import volumes despite falling prices during the period.

Check below for a more detailed breakdown of Brazilian exports via containers over the last five years. The data was prepared based on DataLiner:

Brazilian Exports via Containers | Jan 2021 – Apr 2024 | TEUs

Source: DataLiner (click here to request a demo)

From January to May, exports totaled $138.8 billion, a 2.3% increase compared to the same period last year. Imports reached $102.9 billion, up 1.8% over the same comparison. Export and import volumes rose by 7.4% and 11.5%, respectively, while prices fell by 4.5% and 9.2%. These data were released by the Foreign Trade Secretariat (SECEX) of the Ministry of Development on Thursday.

The chart below provides a historical overview of Brazilian imports via containers with data derived  from DataLiner:

Brazilian Imports via Containers | Jan 2021 – Apr 2024 | TEUs

Source: DataLiner (click here to request a demo)

Despite a less extraordinary harvest compared to last year, soybeans continue to lead exports, with a total value of $21.8 billion from January to May. However, soy’s share in the export basket has decreased, accounting for 15.7% of shipments up to May compared to 19.6% in the same period of 2023.

Replacing soy, items from the extractive industry, such as crude oil and iron ore, have increased their share, representing 14.9% and 9.3%, respectively, of exports. Together, these two products accounted for 24.2% of the export basket from January to May, up from 19.9% in the same months of 2023.

José Augusto de Castro, president of the Brazilian Foreign Trade Association (AEB), said that iron ore prices, which surprised with a rise at the end of last year and the beginning of this year, are now being significantly adjusted. In SECEX’s May data, iron ore prices fell by 11%, and export volumes dropped by 6.3%, resulting in a 16.6% reduction in export revenue compared to May 2023.

Looking ahead, there are uncertainties regarding Chinese demand and the protective measures being taken by several markets concerning steel produced in China.

The situation with oil is different. According to SECEX, crude oil exports increased by 35.9% in value in May, with volumes up 32.1% and prices rising by 2.9%.

For the year to date, oil export revenue grew by 31.2%, with volumes increasing by 32.5%.

“Oil’s performance continues to support the thesis that it will be a major driver of revenue for the country through exports in 2024,” said Lucas Barbosa, an economist at AZ Quest.

With oil’s strong performance, the extractive industry accounted for 25.8% of Brazil’s exports from January to May.

The sector’s record participation in exports for the first five months was in 2021 when it reached 27.1%. At that time, iron ore was the star, accounting for 60% of the extractive industry’s exports, driven by high prices.

From January to May this year, crude oil dominated, making up 57.7% of the segment’s exports.

On the import side, Mr. Barbosa highlighted the increase driven by capital goods and consumer goods. According to SECEX, their values grew by 13.4% and 23.4%, respectively, from January to May compared to the same period in 2023.

Capital goods data highlight what was also evident in the GDP figures for the first quarter, showing a recovery in investment and a rise in imports.

Among consumer goods, Mr. Castro highlighted vehicle imports, which totaled $2.98 billion from January to May, up 59.4% compared to the same period last year. Notably, car imports from China (including Hong Kong and Macau) amounted to $1.22 billion from January to May, up from $201.6 million in the same period last year.

Brazilian exports to China, Hong Kong, and Macau, the main destinations for national sales, fell by 7.9% in May, based on daily averages.

Total sales to Asia also declined by 12.5%. Exports to the European Union increased by 23.1% during the same period, while those to North America fell by 2.6%. Shipments to South America dropped by 32.4%, led by Argentina.

For the year to date, exports totaled $138.81 billion, up 2.3%. Imports reached $102.92 billion, up 1.8%. The trade flow, the sum of exports and imports, reached $241.73 billion, an increase of 2.1%.

Agricultural exports, based on daily averages, fell by 18.5% in May compared to the same month last year.

Herlon Brandão, director of foreign trade statistics and studies, noted that export registrations in May were similar to those in April, which amounted to $30.6 billion.

On the import side, Mr. Brandão highlighted a rise in volumes over the past few months. According to him, this trend has been ongoing since the final months of 2023 and is considered “natural” given the economy’s growth and increasing demand.

Source: Valor Internacional

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