Brazil’s trade balance is telling two stories at once. On the export side, record shipments of crude oil, iron ore and beef are flooding global markets. On the import side, a cooling economy squeezed by the highest interest rates in nearly two decades is pulling purchases down. The result: a $4.2 billion surplus in February, the fourth best for the month since records began in 1989, reversing a $467 million deficit posted in the same period of 2025.
The Ministry of Development, Industry, Trade and Services released the figures Thursday, showing exports at $26.3 billion — an all-time February high, up 15.6% year on year. Imports fell 4.8% to $22.1 billion, driven by a 50.8% collapse in natural gas purchases and a 70.5% drop in non-electric machinery. For the first two months of the year, the cumulative surplus reached $8 billion, up 329% from the same period in 2025, when a one-off oil platform import distorted the comparison.
Oil Leads the Charge
Crude petroleum was the standout, with export revenues surging $1.6 billion compared to February 2025 — a 76.5% increase driven almost entirely by higher volumes as platform maintenance schedules shifted. Iron ore and concentrates rose 20.9%, copper ores jumped 131.2%, and beef exports climbed 41.8%. Soybean shipments increased 15.5%, while fruit exports expanded nearly 34%.
The extractive sector as a whole posted 55.5% export growth, with volumes up 63.6% even as average prices fell 3.5%. Agricultural exports rose 6.1%, and manufacturing grew 6.3%. Non-monetary gold surged 71.9%, and semi-finished steel products nearly doubled at 89.7%.
The High-Rate Import Squeeze
The import decline reflects the deepening impact of Brazil’s monetary tightening. The Selic rate has been held at 15% since mid-2025, the highest level since 2006, and the central bank is only expected to begin cutting this month with a cautious 25–50 basis point reduction. The IMF cut its 2026 growth forecast for Brazil to 1.6%, explicitly citing the lagged effects of monetary policy. GDP grew just 2.3% in 2025, the weakest pace in five years, with household consumption decelerating sharply to 1.3% from 5.1% the previous year.
The machinery sector illustrates the squeeze. Industry group Abimaq reported a 17% drop in revenue in January, with domestic sales down 19%. Imports of capital goods — which had surged to $39.2 billion in 2024, the highest since 2008 — are now retreating as companies defer investment decisions. The government’s February decision to raise import tariffs on capital equipment with domestic equivalents has added another layer of friction.
War and the Outlook
The trade ministry projects a surplus between $70 billion and $90 billion for 2026, comfortably above last year’s $68.3 billion. The Focus survey of private analysts is more conservative at $68.6 billion. Both estimates were calculated before the Iran conflict disrupted shipping through the Strait of Hormuz, which carries roughly 20% of global crude and one-third of internationally traded nitrogen fertilizer.
For Brazil, the war creates an asymmetric situation. Higher oil prices boost export revenues — Petrobras benefits directly — but the Hormuz blockade threatens the 41% of urea imports that transited the strait in 2025 and jeopardizes food shipments to the Middle East, which absorbs 30% of Brazilian poultry and was the destination for $10.3 billion in food exports last year. Market participants now expect the central bank to proceed more cautiously on rate cuts, with the Iran-driven spike in oil prices adding inflationary pressure at the very moment easing was set to begin. The surplus may grow this year, but the composition of Brazil’s trade — and the risks surrounding it — is shifting fast.