Macro Environment
South America’s largest economy, Brazil, saw its Gross Domestic Product (GDP) grow by 1.4% in the second quarter of 2024, significantly surpassing expectations.
Compared to the same period in 2023, Brazil’s GDP increased by 3.3 percent. The industrial sector was the top performer from April to June this year. Conversely, agriculture experienced a decline.
FX and Money markets
Since June, the Central Bank of Brazil has maintained the Selic rate at 10.5 percent.
Nevertheless, economists surveyed weekly by the central bank anticipate a rate hike at this month’s policy meeting, driven by stronger-than-expected economic performance and persistent high inflation.
Exports
Brazil’s corn exports during August totaled 6,063.2 thousand tonnes, marking a sharp decline of 35.25 percent compared to the record-breaking figures from August of the previous year. On the same wavelength, Brazil exported 8.0 million tonnes of soyabeans last month, reflecting a decrease of 4.6 percent compared to August 2023.
Imports
In August, Brazil’s chemical fertilizers imports continued their upward trend, reaching a total of 4,936.6 thousand tonnes, or higher by 14 percent year-on-year.
MACRO ENVIRONMENT
• South America’s largest economy, Brazil, saw its Gross Domestic Product (GDP) grow by 1.4% in the second quarter of 2024, significantly surpassing expectations.
Compared to the same period in 2023, Brazil’s GDP increased by 3.3%.
• The industrial sector was the top performer in Q2, showing a 1.8% growth from the first to the second quarter. This was followed by the services sector, which grew by 1%.
• Conversely, agriculture experienced a decline of 2.3% between the first and second quarters of 2024 and a 2.9% drop compared to the same period in 2023.
• Brazil reported a trade surplus of $4.828
billion in August, marking a nearly 50% drop from the previous year and falling short of the $6.1 billion surplus projected by economists in a Reuters poll.
•Exports in August totaled $29.1 billion, a 6.5% decrease Y-on-Y. This decline was attributed to reduced shipments of soybeans, corn, iron ore, and oil.
• Imports rose by 13% in August, reaching $24.3 billion. This increase was driven by higher imports of chemical fertilizers, medicines, and non-electric engines and machines.
PRICE ENVIRONMENT
FX AND MONEY MARKETS
• Since June, the Central Bank of Brazil has kept the Selic rate steady at 10.5%, ending a nearly year-long period of rate cuts. However, inflation pressures have remained high, with core inflation continuing to rise.
• Economists surveyed weekly by the central bank have revised their expectations to match future interest rate forecasts. They now predict a rate hike at this month’s policy meeting due to stronger-than-anticipated economic performance.
• This adjustment in expectations comes after the largest economy in Latin America reported unexpected growth in the second quarter. Consequently, there are now forecasts for a 25-basis-point increase in each of the remaining rate-setting meetings for the year.
• In August, the BRL/USD exchange rate initially rose but then tapered off, averaging 0.1801 USD.
• This is lower compared to the Real’s average of 0.2040 USD during the same month last year.
• Since the beginning of 2024, the Brazilian Real has weakened by about 14 percent against the US Dollar. Nevertheless, its performance in August remained relatively stable.
EXPORTS 1/3
• Brazil experienced a decline in iron ore exports during August, with a total of 34.3 million tonnes shipped. This represents an 8.11% decrease compared to August of the previous year.
• Compared to the record levels seen in July, iron ore exports in August fell by 12.72 percent.
• For the year up to August, Brazil’s total iron ore exports have reached 253 million tonnes. Despite August’s monthly drop, the overall trend remains positive, with a 6.21% increase compared to last year.
• Brazil exported 8.0 million tonnes of soybeans in the last month, reflecting a decrease of 4.6 percent compared to August 2023.
• Monthly, soybean exports in August saw a significant decline of 28.57% compared to July. This confirms the seasonal trend of declining soybean exports as fall approaches.
• For the year so far, Brazil has exported a total of 83.35 million tonnes of soybeans, which is 3.10% higher compared to the respective period in 2023.
• Brazil’s corn exports during August totalled 6,063.2 thousand tonnes, marking a sharp decline of 35.25% compared to the record-breaking figures from August of the previous year.
• Despite this significant Y-on-Y drop, August’s corn export figures were considerably higher compared to the previous month, with exports rising by 70.61% from July.
• For the year up to August 2024, Brazil has exported a total of 17,972.2 thousand tonnes of corn, representing a 28.78% decrease compared to the same period in 2023.
• In contrast, Brazil’s sugar exports in August 2024 amounted to 3,925.9 thousand tonnes, an 8.2% increase compared to August 2023.
• When compared to July 2024, sugar exports in August rose by 3.8%.
• The upward trend in Brazil’s sugar exports has continued into 2024, positioning the year to potentially set a new record for sugar exports over the past five years. August, in particular, marked the fourth consecutive month of increasing sugar exports.
• In August, Brazil exported 7.7 million tonnes of crude oil, a slight decrease of 1.28% compared to the 7.8 million tonnes shipped in July.
• On a Y-on-Y basis, crude oil exports in August saw a marginal increase of 1%.
• Since the beginning of 2024, Brazil has exported a total of 63.4 million tonnes of crude oil, reflecting a growth of 21.37% compared to the same period last year. If this upward trend continues, 2024 is on track to achieve the highest crude oil export levels seen in the past five years.
• In August, Brazil also exported 1,233.2 thousand tonnes of pulp, a significant decline of 29% compared to July, and a year-on-year decrease of 9.2%.
• For the year up to August, Brazil’s pulp exports totalled 12,923.5 thousand tonnes, representing a modest 0.94% increase compared to the same period in 2023.
• While wood pulp exports remained relatively stable throughout the first seven months of the year, August experienced a sharp decline, mirroring a similar drop observed in the same month the previous year.
IMPORTS
• In August 2024, Brazil’s imports of chemical fertilizers continued their upward trajectory, reaching a total of 4,936.6 thousand tonnes.
• This represents a 14% increase compared to the same period in the previous year. On a month-on-month basis, imports in August rose by 9.59%.
• For the year up to August 2024, Brazil has imported a total of 27,237.9 thousand tonnes of fertilizers, marking a 10.36% rise compared to the same period in 2023.
• In August, Brazil’s wheat imports amounted to 545.5 thousand tonnes, reflecting a 15.58% decline compared to July.
• However, when compared to August 2023, wheat imports have surged by a remarkable 96.23%. This year’s imports align closely with the volumes seen during the 2020-2022 period.
• By August 2024, Brazil had imported a total of 4,561.9 thousand tonnes of wheat, a 64.6% increase compared to the same period in 2023. These levels are also higher than the volumes imported in 2022 and 2021, by 7.8% and 2.9% respectively.
PORT CONGESTION
• In August 2024, the Port of Santos experienced an average congestion of 48 ships, representing a slight rise from the 47 vessels recorded in July.
• This translates to a 2.13% month-on-month increase.
• Despite this minor uptick, congestion levels in August remained 14.3 percent lower compared to the same period in 2023, when the average number of vessels facing delays was 56.
• At the Ports of Tubarão and Vitória, congestion averaged 24 vessels in August 2024, marking a 16.5% increase compared to July.
• When compared to August 2023, which saw an average of 22 vessels, this year’s figures show a 9.82% Y-on-Y rise.
• By the end of August 2024, the total number of congested vessels at Tubarão and Vitória was 26.
BALTIC INDICES
• By the end of August, the Capesize Baltic C 3 Index, which tracks the route from Tubarão to Qingdao, reached $28 per metric tonne. This represents a steady rise since the start of the month, when the index opened at $23.69 per metric tonne.
• For the month of August, the average C 3 Index was $25.36 per metric tonne , marking a 5.64% decrease from July’s average of $26.88.
• When compared to the same period last year, when the average stood at $20.19 per metric tonne, the C 3 Index has surged by 25.63%, highlighting significant Y-on-Y growth that has been evident throughout 2024.
• The Panamax Baltic P 8 Index closed August at $39.14 per metric tonne, showing a downward trend throughout the month, with the average settling at $41.59 per metric tonne.
• In comparison to July, when the P 8 Index averaged $44.87 per metric tonne , August saw a 7.3% decline.
• Compared to August 2023, when the average rate on the P 8 route was $34.22 per metric tonne , this year’s figures reflect a substantial 21.53% Y-on-Y increase.
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