Latin American Exports Rise Amid Coffee, Soybean, and Commodity Volatility

In the first quarter of 2024, Latin America’s exports experienced a growth of 1.3% compared to the same period in 2023.

This increase follows nearly a year of declining exports and occurs despite price volatility in key regional commodities.

The outlook for the region’s trade performance has improved significantly. Looking ahead, the balance of risks appears neutral, though the forecast points to moderate growth with high uncertainty.

The Inter-American Development Bank (IDB) attributes export growth to increased volumes from South America, which offset price declines.

Volatile Commodity Prices

In the first quarter of 2024, year-on-year rates were positive for coffee (36.9%), sugar (8.5%), iron ore (1.9%), and oil (1.0%).

However, soybean and copper prices declined by -20.9% and -5.3%, respectively.

Prices remain historically high but are trending downward, expected to continue in the coming quarters.

Increased volatility this year varies across products and sectors. Coffee saw exponential growth, while soybeans and sugar experienced contractions.

In the extractive sector, copper and oil prices rose, while iron ore prices fell.

 Commodity Price Changes in Q1 2024

• Coffee: Prices surged by 36.9% year-on-year due to El Niño’s impact and increased demand. Arabica prices rose 8.9%, and Robusta surged by 59.4%.
• Soybeans: Prices dropped 20.9% year-on-year due to record harvests in Brazil and production recovery in Argentina, despite weaker demand from China. Floods in Brazil could drive prices up again.
• Sugar: Prices rose by 8.5% year-on-year, driven by reduced global supply and high production projections for 2024 in Brazil.
• Oil: Prices increased by 1.0% year-on-year, boosted by OPEC+ production cuts amid Middle East conflicts.
• Copper: Prices fell by 5.3% year-on-year, despite a slight rebound in early 2024 due to improved Chinese economic activity and South American production disruptions.
• Iron Ore: Prices increased by 1.9% year-on-year, driven by China’s economic recovery, but began to decline in early 2024 due to increased supply from Australia and Brazil.

Latin American Exports Rise Amid Coffee, Soybean, and Commodity Volatility

South American exports grew by 1.9% year-on-year in Q1 2024, following a 4.5% decline in 2023. Increased volumes offset the impact of falling commodity prices.

Central American exports slowed, rising by 0.7% year-on-year in Q1 2024, after a 2.3% increase in 2023.

Mexico’s external sales rose by 1.7%, while Central American shipments fell by 7.1%.

Total imports in the region, which fell by 6.3% in 2023, continued to decline in Q1 2024 (-2.1% year-on-year), but at a slower pace.

Mexico’s real exports dropped by an estimated 2% year-on-year, and El Salvador’s fell by 13.4%.

Conversely, South American export volumes increased by 8.3% year-on-year.

Notably, Paraguay saw a 27.8% increase, Argentina 18.6%, Venezuela 17.6%, Peru 6.5%, Brazil 6.4%, Uruguay 4.0%, Chile 2.9%, and Colombia 2.6%.

However, Argentina, Colombia, Peru, and Venezuela remain below pre-pandemic levels.

Latin America’s diverse commodity exports and fluctuating prices highlight the region’s economic complexity.

This growth amidst volatility shows resilience but also underscores ongoing challenges.