Brazil’s iron ore export revenues set to dethrone soybeans in 2021 – AEB

RIO DE JANEIRO, BRAZIL – The revenue from Brazilian iron ore exports should increase by approximately 60% in 2021 compared to last year, to US$41.25 billion, with the mineral commodity dethroning soybeans from the top ranking in foreign exchange generation in the country after 6 years, according to the Brazilian Foreign Trade Association (AEB) on Tuesday.

With the surge in ore, in a year in which soybeans may also close with record export volumes and skyrocketing prices, Brazil should end 2021 with its trade surplus at an all-time high of almost US$80 billion, beating the 2017 mark (US$67 billion), said AEB’s CEO José Augusto de Castro.

The review was made after a surge in iron ore prices in the wake of steady demand from China, which has been paying premiums for Vale’s better quality product, which accounts for most of the country’s exports.

“For now, I have changed only the price (of iron ore), it may be that volume will change something later,” said Castro, who conducted a preliminary update on estimates.

In a prior projection for 2021, released late last year, AEB had estimated that iron ore exports would reach US$35.7 billion, boosted by a 42% price increase, estimated at the time. In 2020, exports of the mineral yielded about US$26 billion to the country.

Now the figures are even higher. In the first 4 months this year, the prices of ore shipped abroad by Brazil increased 77.6% while soybean prices went up 18%, according to the Brazilian Foreign Trade Secretariat (SECEX), reflecting low stocks in the chain and lower seasonal supply, in addition to external demand.

One of the largest global exporters of iron ore, Brazil sold the commodity in April for an average US$129.80 per ton, compared to US$67.60 per ton in the same month last year, according to SECEX.

Together, iron ore and soy exports would account for over 30% of the country’s total, estimated by AEB at US$253.6 billion, below the record set in 2011, according to data compiled by the association.

The 2011 US$256 billion record for Brazil’s exports was set in a year when other commodities exported by Brazil, such as oil and pulp, were at higher values, although at lower volumes.

Soy power

Unlike iron ore, with Vale’s supply still below capacity, this year Brazil produced a record soybean harvest, estimated at 136.3 million tons by the Brazilian Association of Vegetable Oil Industries (ABIOVE), which represents an increase of 6.5%.

The volume exported by Brazil, the largest soy exporter and global producer, should reach a record 84.5 million tons, an increase of 1.8%, in a year when prices are also rising, having reached 8-year highs on the Chicago exchange recently, reflecting a tightening of supply and planting data in the United States.

To date, ABIOVE estimates that revenues from soybean exports could reach US$37.2 billion, compared to US$28.56 billion in 2020, with average prices rising by around US$100 annually, to US$440 per ton.

Adding up soybean, soymeal and soybean oil shipments, the total oilseed industry exports would reach an all-time high of US$45.4 billion, more than US$10 billion higher than in 2020, according to ABIOVE.

Source: Moneytimes