Economics and Commodity Markets in Brazil
Brazil is the fifth largest country in the world and the largest country in Latin America, with 8.5 million square kilometers of national territory. Similarly, Brazil’s territory presents a very bio-diverse region composed mainly of tropical and subtropical climates, including the precious Amazon rainforest. Furthermore, Brazil is a major producer of both mineral and agricultural commodities, such as lumber, iron ore, tin, steel, and petroleum. This article explores the status of commodity markets in Brazil.
Economics and Commodity Markets in Brazil
Even though agriculture only represents 6% of Brazil’s overall economy, the agricultural sector employs some 16% of the nation’s labor force. Amongst Brazil’s leading agricultural commodity crops is wheat, with a total harvest area that has gone from 2.7 million hectares during 2014/15 to 2.5 million in 2015/16, and is expected to reach 2.1 million hectares for 2016/17. Nevertheless, Brazilian wheat production has increased from approximately 6 million metric tons throughout 2014/15 to an expected total of 6.7 million metric tons for 2016/17. In terms of trade, Brazil is a net importer of wheat, with an average 6 million metric tons imported annually, most of which is purchased from fellow Mercosur countries, such as Argentina, Uruguay, and Paraguay. Meanwhile, Brazil exported 1.7 million metric tons of wheat during 2014/15, 1.1 million in 2015/16, and is forecast to export 1.5 million metric tons for 2016/17. Therefore, the domestic market in Brazil consumes an average of 11 million metric tons of wheat annually.
When it comes to corn, Brazil has devoted an annual average of 16 million hectares of land to the cultivation of this crop throughout the last several years. Likewise, Brazil is a major producer and a net exporter of corn, not only as a food product, but also for the manufacturing of ethanol as well as the use as animal feed. Brazil’s annual corn output has gone from 85 million metric tons during 2014/15 to 67 million in 2015/16, and is expected to rebalance towards 85 million metric tons of corn for 2016/17. In terms of trade, Brazil’s corn imports are minimal, averaging less than 1.8 million metric tons annually. Meanwhile, Brazil exported approximately 22 million metric tons of corn throughout 2014/15, followed by 35 million in 2015/16, and is expected to export more than 20 million metric tons of corn during 2016/17. Brazilian corn exports are mainly destined for Asian markets, notably Iran, Vietnam, and Japan.
Finally, rice production in Brazil accounts for more than 2 million hectares of land devoted to this crop every year. On average, Brazil produces more than 10.5 million metric tons of rough rice annually, which equates to more than 7.2 million metric tons of milled rice. In terms of trade, Brazil is neither a major exporter nor importer of rice, but rather enjoys a relative trade balance of this agricultural commodity. During 2014/15, Brazil imported some 680.000 metric tons of rice, followed by approximately 800.000 metric tons in 2015/16. Meanwhile, Brazil exported little over 900.000 metric tons of rice during 2014/15 and 650.000 metric tons in 2015/16.