Brazil's Foreign Trade Is Showing Signs Of Declining Commodity Prices

Since entering the new century, Brazil has become a major beneficiary of the commodity boom in the international market. Brazil is a major producer and exporter of agricultural products such as coffee, soybeans, corn, sugar and orange juice. To some extent, it has made up for the shortage of international markets and stabilized prices. At the same time, Brazil is also a producer and exporter of many metal products, especially iron ore. Brazil's iron ore resources are very rich, proven reserves of about 210 million tons, with high grade, opencast mining and other excellent conditions.

However, the good times will come to an end. In recent years, the surplus of Brazil's foreign trade is decreasing. Statistics from the Ministry of industry and trade of Brazil showed that the total foreign trade volume of Brazil last year was 481 billion 795 million US dollars, and the surplus decreased by 87% compared to the same period last year, only 2 billion 561 million US dollars, the worst performance since 2000.

Brazil global newspaper reported that soybean prices had dropped by 27.4% in the international market this year. The price of one bushel soybean dropped from $13 last year to $10 this year and will drop to 9 dollars in 2015. In addition, the price of iron ore has dropped by 40% this year. Although the quality of iron ore produced by vale is high, it is still very passive in the fierce international competition due to its high transportation cost.

Brazil Rosenberg consulting company recently issued a forecast report that, affected by the fall in international market prices, although Brazil will maintain its current export volume in 2015, only two soybean and iron ore items will reduce foreign trade revenue by 17 billion 500 million US dollars next year, of which soybean will be reduced by 10 billion 500 million US dollars and iron ore will be reduced by 7 billion US dollars. As soybean and iron ore account for 28% of Brazil's total exports, these two commodities fall in price for Brazil's foreign trade. surplus Will bring a huge blow.

　　 Brazil Figures from the central bank show that Brazil's export volume has increased in the first half of this year, but foreign trade income has declined, from January to May. trade deficit Up to 4 billion 900 million US dollars, we expect to achieve a surplus of US $2 billion for the whole year and a new low.

Clemons Nunes, an economist at the Vargas foundation in Brazil, believes that since the international commodity prices are basically priced in dollars, the inflow of the US dollar has decreased, the pressure on the exchange rate of Brazil's reel and the instability of the Brazil general election have recently accelerated the appreciation of the dollar against rial, which is not conducive to the Brazil government's control of inflation targets. Some institutions, including Noam Ma securities, have predicted that the US $1 will be able to exchange 2.85 Real at the end of 2015, although the Brazil central bank still insists on the judgement of 2.5 Real at the end of 2015.