Jul 13, 2010
Raw Commodities Account for Nearly Half of Brazil's Exports
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Due to primarily Chinese demand, Brazil's exports of raw commodities, including both agricultural and mineral, now account for 43% of all Brazilian exports. A decade ago, raw commodities accounted for only 22.8% of Brazilian exports. In contrast, over the same period, the percentage of Brazilian exports classified as manufactured or semi-manufactured fell from 75% of the total in 2000 to 54% of the total in 2009.
Brazil is fortunate of enough to have the two items that the Chinese need more of namely soybeans and iron ore. In June iron ore accounted for 13.6% of Brazil's total exports, which is double the percentage compared to 2000. Combining soybeans and iron ore, these two products account for 25% of Brazil's exports, whereas in 2000, they accounted for only 10%.
The concentration of raw commodity exports from Brazil really took off in 2008. As the worldwide economy slowed, the percentage of manufactured and semi-manufactured goods exported to industrialized countries fell. At the same time Chinese economy remained relatively strong and the demand for raw commodities also remained strong.
Over the last decade, China has increased its soybean imports by 400%. Just recently, the Chinese population reached a milestone in that there are now more Chinese living in urban areas than in the countryside and the increasing urban population demands more food and protein. During the same decade, Chinese iron ore imports increased by a thousand percent due to the increased demand for heavy machinery and infrastructure improvements.