April 12, 2013

Brazil's agribusiness exports up 6% in Q1 2013

Despite logistics issues, Brazil's Agriculture Ministry figures show that foreign sales increased by 6% from January to March this year.

Figures released on Tuesday (Apr 9) by the Secretariat for International Relations of Brazil's Ministry of Agriculture show that the country's agribusiness exports reached US$20.57 billion in the first quarter this year, up 6% from the same period in 2012. Imports were down 1.1% to US$4.28 billion and the agribusiness trade surplus was US$16.29 billion. Despite the good performance, analysts claim Brazil has missed out on the opportunity to post even better sales results. Logistics issues such as port congestion have caused delays in shipments from the country.

"There was a strong international demand and high beef and grain sales were expected. But problems at the ports (trucks had to wait on roads for days on end waiting for the time to unload soy onto ships) prevented the full production from being shipped out, and thus an even better result from being attained. We have shot ourselves in the foot," said the commodities analyst for Paraná-state brokerage firm Cerealpar, Steve Cachia. The US' corn crop failure drove meat prices up. That is why Cachia believes meats exports performed well. Brazilian beef was embargoed by several countries because last year, the government revealed that a cow carrying the mad cow disease agent died in 2010, although it did not develop the illness.

Meat was the main product shipped from Brazil during the period. Export revenues stood at US$3.89 billion, up 7.7% from 2012. Of those, poultry sales accounted for US$1.81 billion, up 2.6% from 2012, despite the fact that volume shipped was down 7.9% from 2012. The decline in amount was offset, according to the Ministry, by increased product price. Beef import revenues were also up in Brazil in the first quarter. Value-wise, sales were up 19.7% to US$1.46 billion.

Soy, oil and bran export revenues were the second highest in Brazilian agribusiness. Exports fetched US$3.66 billion. Grain sales alone accounted for 66.3% of total revenues, but were down 25.1% from 2012. Sugar and ethanol exports stood at US$3.3 billion, of which 87.3% consisted of sugar.

China imported US$7.69 billion from Brazil from January to March, down 0.3% from the first quarter of 2012. Despite the decline, the country was the leading Brazilian agribusiness export target. The country that contributed the most to the increase in Brazilian first quarter exports was South Korea, which imported US$505 million more than in 2012. Corn imports, for instance, leaped from US$2.62 million in January-March 2012 to US$397 million in January-March this year.

A macroeconomics researcher at the Centre of Studies in Applied Economics of the University of São Paulo (CEPEA/USP), Andréia Adami also said logistical bottlenecks have prevented an even better export performance. The volume shipped was 6.6 million tonnes, down 36% from 2012. Despite this imbalance in the beginning of the year, the government forecasts an increase in soy exports. "The estimate is for exports to be up 13% from 2012. Sales should offset the trend seen early on in the year," said Adami.

Cachia said corn and soy sales should be high at least in the first half of the year. From September onwards, they should lose competitiveness due to US crop shipments. During the period, Cachia estimates, exports of soy bran and oil should be up. He said that despite competition from US corn farmers, Brazil has opportunities to tap into when it comes to this commodity. "Demand for Brazilian corn in Middle East and North Africa countries is very strong, and sales to these regions should increase in years to come. Brazil must pay attention to this opportunity," he said.