Brazil reveals 'disappointing' export figures
Brazil posted its worst trade surplus in 10 years, while the country’s monthly exports have also suffered, the Brazil trade ministry reported on Monday.
Brazil’s trade surplus for June totalled US$807mn, bringing the balance for Brazilian trade for the first six months of 2012 to a surplus of US$7.1bn – the worst surplus for that period since 2002. June’s figure is down from US$2.95bn in May.
The country's export sales totalled US$117.2bn in the second half of 2012, a decrease of 0 9% from the same month last year (US$118.3bn). January to June exports also fell by 1.7% compared to the same period a year earlier.
The weakest performing commodity exports this year have been iron ore, pig iron and aluminium, mainly due to the global economy and rising prices, in particular CBOT (The Chicago Board of Trade) prices, Martin Schmitz, executive director of structured finance for Latin America at Banco WestLB do Brasil, (soon to be Mizuho, subject to authorisation) tells GTR.
Speaking at a news conference in Sao Paulo on Monday, the executive secretary of the ministry of development, industry and foreign trade (MDIC), Alessandro Teixeira, said: "The performance in June was below what [was] expected."
Teixeira stressed that next month’s figures will be crucial in assessing the country’s export goals for the year ahead. The MDIC’s current 2012 target stands at US$264bn.
Teixeira said that the government will still have to evaluate the result of the trade balance in July before it makes any revisions to its end-of-year targets.
While the Brazilian government is planning to impose further measures to increase the country’s exports, it hopes that the continued weakening of the Brazilian real will also entice more buyers to the market.
WestLB’s Schmitz also believes that producers will benefit from the devaluation of the Brazilian real.
“The valuation of the Brazilian currency since 2003 to a level of 1.55 R$/USD has led to increased production costs. The current levels of around 2.00 R$/USD are making soy producers very happy, and we are anticipating a rise in sales to traders for the first semester. The current levels, especially freight and labour costs, are becoming more attractive for producers, as sales are USD-denominated,” he tells GTR.
He adds that the sector has also been affected by the decision of the Brazilian Central Bank on March 01 this year to restrict its lending of US dollar-denominated export pre-payments.
However, last week, the bank announced that it was easing its restrictions, giving foreign banks the opportunity to extend their pre-export finance loans.
“In our knowledge, most of the funding needs have been compensated by higher limits for short-term working capital loans in the form of ACC (advance on the exchange contract), which only Brazilian banks can provide.”
A spokesperson at the Brazilian Development Bank (BNDES) tells GTR that the bank is actively encouraging exports from Brazil, especially the higher aggregated-value products.
“Brazilian suppliers need to be competitive in overseas markets to be successful and it depends on several factors, including but not limited to, how financially attractive their exported products/services are.”
However, the spokesperson says that public support mechanisms in Brazil are lagging behind the level of support other developing countries are able to provide towards their own exporters.
“Due to the international turmoil that the important markets are facing these days, we expect to keep the pace in sustaining the support we have managed to establish and, if the demand requires so, being able to take advantage from the available opportunities.”
Brazil’s top five exporting countries in June were China (US$3.945bn), US (US$ 2.09bn), Argentina (US$1.311bn), Netherlands (US$1.150bn) and Japan (US$641mn).