Brazil Sept trade surplus surges from year ago

Brazil’s trade surplus nearly tripled in September from a year earlier, beating market expectations, as exports rose despite slow growth in the United States and Europe.

Brazil posted a trade surplus of $3 billion in September, up from $1.1 billion in the same month a year ago, the trade ministry said on Monday. The trade surplus was $3.9 billion in August.

The median estimate for September was for a surplus of $2.5 billion, according to a Reuters survey of 10 economists.

Strong foreign sales of raw materials such as iron-ore, sugar and soybeans and semi-manufactured goods like paper boosted overall exports in September a month that saw Brazil’s currency post some of its biggest declines in two years.

The government said the real’s depreciation did not impact September’s trade balance, but it may play a role in coming months.

“The effects will be felt after a period of three months,” Secretary of Foreign Trade Tatiana Prazeres told reporters. “Basically, starting from the beginning of next year is when we will see a more accentuated impact, if there is one.”

Because most international trade is priced in dollars, a weaker real tends to make makes Brazilian exports cheaper in foreign markets and imports more expensive at home.

Despite the real’s declines, the average exchange rate in September 2011, 1.75 reais to the dollar, was only marginally weaker than the average a year earlier.

The Ministry of Development, Industry, and Foreign Trade is maintaining its 2011 export target at $237 billion despite turmoil in global markets and currency volatility.

The strong September trade performance also resulted from favorable terms of trade for commodities exporters. Brazil is the largest exporter of beef, coffee, sugar, ethanol and orange juice and the second-largest exporter of iron-ore and soybeans. It is a rapidly growing oil exporter.

“What we’re seeing is an improvement in terms of trade, with Brazil’s export prices recovering in relation to the prices of imports,” said Jose Francisco de Lima Goncalves, chief economist at Banco Fator in Sao Paulo.

In September, exports reached about $23.3 billion, down from $26.2 billion in August and up from $18.8 billion in September last year.

GROWTH RATE SLOWING

Robust growth in commodity-hungry China has offered some support for Brazilian products by keeping global commodity prices from plummeting to levels seen in the 2008 financial crisis.

Imports last month totaled about $20.2 billion from $22.3 billion in August. In the year-ago period, imports were $17.8 billion.

In 2010, Brazil’s trade surplus dwindled to $20.3 billion from $25.3 billion the previous year as the country’s fastest economic expansion in nearly three decades, coupled with a strong currency, increased demand for imports.

A slowing economy and a weaker real could start to dent Brazil’s appetite for imported consumer and capital goods.

The real, which had gained as much as 8 percent in the year through late July, has erased all those gains. It is now nearly 12 percent weaker than it was at the beginning of 2011.

On the other hand a global slowdown driven by anemic economies in Europe and the United States could hurt demand for Brazilian exports, analysts said.

The growth rate for both exports and imports in Brazil has started to slow in recent months and that downward trend should continue with a deteriorating global economic outlook, Banco Fator said a research note to clients.