Why Brazil’s Exports Stayed Steady in June

Brazil exports

Brazil (EWZ) is currently engulfed in numerous domestic issues, including severe corruption allegations among politicians and high unemployment. Still, external factors appear to be supporting economic recovery in 2017, though Brazil’s exports remained flat at ~$19.8 billion in June 2017 compared with the previous month.

 Why Brazil’s Exports Stayed Steady in June

Exports in June 2017

Exports from Brazil (BRZU) remained flat in June 2017 on a month-over-month basis but jumped by 23.9% YoY (year-over-year). Exports were mainly boosted by the sales of semi-manufactured products, including iron and steel, sugar, pulp, sawn wood, and leather.

Basic product exports increased for corn, crude oil, copper, iron ore, coffee beans, and soybeans. Exports of manufactured products grew 16.1% for steel, iron pipes, and cars.

Exports in 1H17

Exports in the first half of 2017 stood at $107.7 billion, representing a 19.3% rise over 1H16. Higher prices for iron ore, oil, soy, cargo vehicles, and automobiles were the main drivers for Brazil’s increased exports so far this year.

Commodity and oil prices have meanwhile surged since 2016, which appears to be helping. But for the last two months, oil (USO) and commodity (DBO) prices have declined, which is likely to impact the exports of the commodity-dependent countries for the rest of 2017. Brazil’s iron ore exports to China (FXI) grew 19.96% YoY in June.

Iron ore, one of Brazil’s largest export products, saw prices decline ~8% in June 2017 from the previous month. This is likely to impact Brazilian markets, which rely heavily on exports. The iShares MSCI Brazil Capped (EWZ) fell ~2% in June.