Commodities on the rise make forecasts for the trade balance to jump 60% – 03/26/2022 – Mercado

The recent rise in international commodity prices, especially those most directly affected by the war in Ukraine and the sanctions imposed on Russia, is already leading to almost 60% higher projections for the trade balance in 2022.

This week, the Central Bank significantly revised upwards its projections for this year’s trade balance, from a surplus of US$ 52 billion (R$ 253 billion) to US$ 83 billion (R$ 404 billion). This volume is the difference between what Brazil exports to the world and what it imports from abroad.

The movement is due to an increase in expectations for Brazilian exports this year — which rose from US$ 276 billion (R$ 1.33 trillion) to US$ 328 billion (R$ 1.58 trillion).

According to the institution, grain prices also rose due to uncertainties regarding the impact of the conflict on exports from the countries involved, as well as on international fertilizer prices.

Although a reduction in the volume exported is expected, with the negative impact of weather problems on the soybean crop in the southern region of the country and with lower expectations for the production of the extractive industry, the expectation of a strong increase in exports in value is a consensus among analysts. ears by sheet.

Since the beginning of the conflict in Ukraine, on February 24, the CRB (Commodities Research Bureau) index, a basket that gathers prices of 19 basic products (such as grains, oil and metals), has risen 15%. From the beginning of 2022 until now, this increase was 31.28%, according to Trading Economics.

In the case of oil, the rise in the CRB was 28%, between February 25 and March 24; for soybeans, 7.6%; in wheat, 29.7%.

On the other hand, analysts expect a price increase in manufactured products that Brazil imports. The price of imports this year is expected to be 20% higher than in 2021, due to shocks in production chains and rising energy prices.

Looking at what Brazil buys from abroad, the BC also now predicts an increase, from US$ 225 billion (R$ 1.08 trillion) to US$ 245 billion (R$ 1.18 trillion).

In imports, the projections were affected by the expectation of high international prices, especially of fuels and fertilizers, but the BC already expects a brake on the purchase of products from abroad, in line with the deceleration of the Brazilian industry this year and of the domestic activity as one all.

In 2021, Russia accounted for 23.3% of Brazilian imports of products classified as fertilizers. That year, the trade balance recorded a surplus of US$ 61.2 billion, a record for the historical series.

Expectations for the country’s trade with foreign countries in 2022 were also high among banks and consultancies. Itaú Unibanco, for example, revised its balance surplus forecast from US$ 67 billion (R$ 322 billion) to US$ 74 billion (R$ 355.7 billion).

For Júlia Gottlieb, economist at the bank, the direct impact of the war between Russia and Ukraine on the Brazilian economy tends to be small, given the limited trade relations between Brazil and the two countries.

“The main effects, therefore, will be indirect, via the increase in international commodity prices, as well as impacts on GDP [Produto Interno Bruto] global”, says the economist.

The institution also estimates an increase in the weight of exports in Brazilian GDP in 2022, to 20%, compared to 17% last year.

  • High trade balance

Projections for 2022, in billions of dollars Anterior Current
Trade balance 52 83
exports 276 328
imports 225 245
current transactions -21 5

Source: Central Bank

At XP, the forecast for exports went from US$ 299.5 billion (R$ 1.44 trillion) to US$ 324.4 billion (R$ 1.56 trillion).

“The review incorporates shocks in commodities and exchange rate variation. The real is doing better this year and there are some hypotheses for this to be happening, but both exports and imports should grow compared to 2021”, says Alexandre Maluf, consultancy macroeconomics specialist.

The dollar is in its fourth week of declines since the start of the war in eastern Europe. On Friday (25), the US currency closed at R$ 4.7470.

In the case of Credit Suisse, there has not yet been a revision of the estimates for exports and imports this year. The institution’s chief economist, Solange Srour, however, highlights the importance that the military conflict will have in international trade.

“The weight of exports in GDP should be greater, but what matters for medium-term growth are the impacts that higher income from global trade can bring to potential GDP: increased investment and productivity, and that will depend on whether we go use this moment of bonanza to carry out reforms or not”, says she, who is also a columnist for sheet.

According to the latest Focus bulletin, also from the Central Bank, the market estimate is that Brazil will grow 0.5% this year and that the IPCA will remain at 6.59%.


Despite the positive revisions to the trade balance this year, projections by researchers from Ibre (Brazilian Institute of Economics, from Fundação Getulio Vargas) point out that there was a drop in the first two months of 2022, compared to the same period last year, in the so-called terms of trade (the relationship between the prices of a country’s exports and those of its imports).

The analysis shows that the terms of trade fell by 13.4% in the first two months of this year compared to the same period last year. “Until now, import prices are increasing faster than exports. The market is betting that Brazil should grow very little this year, and imports are sensitive to the level of activity”, says Lia Valls, a researcher at FGV- Ibre.

An improvement in the terms of trade increases real income. This allows, with the same exports, to import more.

Valls adds that the increase in prices of agricultural products is visible, but it is not known whether this will generate a large sustainable effect. “If international trade suffers from the uncertainties of the war, even though Brazil is in a distant region. The truth is that, in the end, no one ever wins with a war.”

Srour, from Credit, assesses that the coming months should be positive for the terms of trade and that this effect should still take time to dissipate.

On the horizon of analysts, the war between Russia and Ukraine, in addition to boosting fuel prices, has put pressure on agricultural products (such as wheat and soybeans). If, on the one hand, the rise in prices is good for the producer, analysts predict new transfers to food prices, which tend to put even more pressure on inflation.

The increase in commodity values ​​was already underway since 2021, being highlighted as one of the factors that explain the increase in the inflation rate in the country, in the form of a new cost shock to inflation in Brazil, says the Ibre survey.

Inflation in March, by the IPCA-15 (Broad National Consumer Price Index – 15) rose 0.95%, the highest variation for the month since 2015, according to the IBGE (Brazilian Institute of Geography and Statistics).

Inflation is already beginning to mirror the effects of the conflict in Eastern Europe and was impacted precisely by the Food Act.

“The pressure of high food prices worldwide, given the importance that the Ukraine region has in the food supply to Europe, is good for Brazil, at first, but this translates into a problem of inflation”, says Valls. .