São Paulo – Exports from Brazil to Arab countries fetched over US$ 1 billion in June, up 5.36% from June last year, according to figures supplied by the Brazilian Ministry of Development, Industry and Foreign Trade and compiled by the Arab Brazilian Chamber of Commerce. It was the first month in 2014 when sales increased.
The performance was mostly driven by sugar sales, which stood at US$ 372 million, up 26.2% from June 2013. The export volume increased even further, by 36%, to 857,000 tonnes. This means there was an actual increase in demand, as well as in prices.
To the Arab Chamber CEO Michel Alaby, the reason for the higher sugar imports is stockpiling for the Ramadan, which began in late June. During the holy month of the Islamic calendar, Muslims fast from sunup to sundown, but group meals and sweets are often consumed at night.
Apart from sugar, the main items purchased by Arab countries from Brazil were poultry and beef. Still, exports of these items declined by 19.4% to US$ 305 million.
Brazil is facing problems exporting meat to some of the Arab countries. For beef, specifically, Saudi Arabia and other Gulf countries have banned the product following the Brazilian government’s announcement, in December 2012, that an animal that died in 2010 in the state of Paraná was a carrier of the mad cow disease causative agent, although it did not develop the condition.
The World Organisation for Animal Health (OIE) has maintained Brazil’s negligible risk rating for bovine spongiform encephalopathy.
This year, another occurrence took place in the state of Mato Grosso and was considered “atypical,” as was the first one, since the animal did not develop the disease, but Egypt, the leading Arab importer of Brazilian beef, banned imports from the state.
Other Arab countries have also switched suppliers seeking lower prices, like those charged by India. Australia is another major supplier of beef to Arabs.
Another key export item whose sales increased is iron ore, at US$ 162 million, up 5.27% from June last year.
Sales of chemicals soared too, especially roasted alumina, up 621% from June 2013 to US$ 54 million.
As for iron ore, exports increased to Oman, where Brazil’s Vale mining company owns a pelletizing plant, a warehouse and a maritime terminal.
“Other countries are buying more ore, and it is shipped to them through Oman,” Alaby noted. He believes the demand for inputs such as iron ore and alumina shows that industry activity is picking up in the region, which is a steel and aluminium manufacturer.
The United Arab Emirates surpassed Saudi Arabia in June as the leading target for Brazilian products as a result of sugar and alumina purchases. Exports to the country grossed US$ 264 million, up 76% from June last year.
Saudi Arabia imported US$ 189 million worth of Brazilian products, up 3.8% June-on-June. Exports to Egypt were down 23% to US$ 128 million, Exports to Oman were up 107% to US$ 97.4 million. Algeria’s imports were down 21% to US$ 94 million.
Brazilian imports of Arab products were up 51% to US$ 1.13 billion June-on-June. The performance was mostly driven by oil and oil products.
Half-year
The export performance in June was not sufficient to offset the overall decline in exports in the first half of the year. Sales to Arab countries fetched US$ 6.082 billion from January through June, down 7.31% from the same period in 2013.
To Alaby, whether sales to the region will or will not increase in months to come will largely hinge on how negotiations for lifting the beef ban unfold. He believes, however, that from August on, food exports may grow due to post-Ramadan inventory replenishment needs.
Brazilian imports from Arab countries amounted to US$ 5.55 billion in the first half this year, down 2.53% from the first half of last year.
*Translated by Gabriel Pomerancblum
