Commodities Exports of Brazil:

Brazil has become a major player in commodities during the last couple of decades. It is a
major producer of coffee, soybeans, corn, sugar and orange juice. The rapid increase in
Brazils agricultural production in recent decades has been positive for the world as it likely
prevented massive shortages in global food inventories.
Brazil has received massive investment in their agricultural sector in recent years. Big players
in hedge funds have invested in agricultural land, and valuations have increased substantially.
Investment in the Brazilian agricultural sector has helped to bring the country into the twentyfirst century and now there is widespread use of modern farm equipment from companies like
John Deere and other leading manufacturers. Brazilian production has become more efficient
in recent years, and the nation has increased production volume of many agricultural
commodities. Brazil competes with other countries in the world export market for many
commodities.
Brazil is a leading producer of minerals producing and marketing nearly 80 mineral
commodities. The mining industry in Brazil not only contributes a significant part to the
countrys annual gross domestic product (GDP), but was also responsible for the countrys
consistent trade surplus until 2014. Brazil is the worlds largest producer of niobium and
second largest of iron ore and manganese. Further, it is the third largest producer of bauxite
and fifth largest producer of tin and copper. In addition, Brazil is an importer of mineral coal,
potash, copper, zinc, sulphur, etc.
The currency of Brazil, the real, is truly a commodity currency. As such, the value of the
Brazilian real is highly correlated with commodity prices. During the secular bull market in
commodities that began in around 2002, the value of the real soared. Recently, as commodity
prices have moved lower so has the Brazilian currency. As the chart illustrates the value of
the currency of the huge commodity producer more than doubled between 2002 and 2008.
The global economic crisis of 2008 caused the real to move sharply lower, only to recover
and make new highs in 2011 as the secular bull market in commodities peaked. Since then the
real has headed south, recently trading at the lowest level since 2004.

Contribution of Various Sectors to GDP

Industry; 534072

Agriculture; 130152

Services; 1579776
Agriculture

Services

Industry

Their production spans a number of different sectors:

1. Mining
Iron ore is the most significant mined commodity for the nation, the chief ingredient in the
manufacture of steel. Brazil is the third largest iron ore producing country in the world. The
country is the world's thirteenth largest gold producer and a minor copper producer. When it
comes to aluminium, Brazil is a major force on a global basis. The chief component
of aluminium production is bauxite -- Brazil is the third largest producer in the world behind
Australia and China. Brazil is the sixth largest producer of aluminium metal in the world.

Brazil's Contribution of mineral Production compared with the World's total

Zinc
2.4
Tin4.1
Tantalite

28

Niobium

98

Manganese

20

Kaolin 6.8
Iron Ore

17

Gold
2.3
Ornamental Rocks 7.7
Copper2
Bauxite

14
0

20

40

60

80

100

120

Percentage Contribution

2. Energy
Brazil is the world's ninth largest producer of oil. Brazil is the sixth largest consumer of oil in
the world. Over recent years, discoveries of energy reserves offshore could increase Brazil's
presence as an oil producer and even as a producer of natural gas in the years ahead. Brazil is
an important player in biofuels by virtue of its position as a huge producer of agricultural
products. Due to its position in terms of sugar production, Brazil is a significant producer of
sugar-based ethanol.

3. Agriculture:
Brazilistheworld'slargestproducerandexporterofsugarcaneandaleadingcoffee
producer.Brazilproducesaround20%oftheworld'sannualsupplyofsugarcane,whichis
around50%morethanIndia,theworld'ssecondlargestproducer.Brazilproduces
approximatelyonethirdoftheworld'scoffeebeans.Thenationisalsotheworld'ssecond
largestproducerofsoybeanstheUnitedStatesisnumberoneinthisgrain.Thesearejusta
fewoftheagriculturalcommoditiesthatBrazilproduces.Pineapples,cashews,oranges,
papayas,tobacco,beef,chicken,cornandpalmarealsomajoragriculturalproductsofthe

SouthAmericannation.Asoneoftheworld'sleadingagriculturalcommodityproducers,the
weatherinBrazilplaysanimportantroleinfoodpricesaroundtheworld.AdroughtinBrazil
in2014resultedincoffeepricesmorethandoublinginjustafewmonths.Whenitcomesto
rawmaterialmarkets,Brazilisanimportantforceonworldmarkets.

Coffee
Brazil is the world leader in coffee production. They are the largest producer in the
world of high-quality Arabica beans. Each year, the coffee-growing regions in Brazil
worry about threats of a freeze. On average, every five years a freeze in Brazil causes
problems with the coffee crop. Adverse weather conditions cause the price of coffee to
soar. Brazilian coffee has an odd growing cycle. The nation switches between on and
off years. In an on year there is ample and full production, during these years the
Brazilians tend to replenish stockpiles. The "off" years frequently experience a drop in
production of 10 to 20 percent.
Grains
Soybeans are the primary focus of Brazilian agriculture. Brazil has become
competitive in production with the U.S., the world's number one producer of beans.
Almost all of the soybeans produced in the U.S. are the genetically modified
soybeans. Brazil has been more reluctant to use this variety.
Corn is also a major crop in Brazil, but the U.S. dominates world corn production.
Brazilian farmers have become efficient, but problems in Brazilian infrastructure have
limited the ability of the country to achieve its potential. Brazil does not have the
transportation and logistical system necessary to compete with the United States.
Strikes and logistical problems are persistent problems Brazil faces.
Orange Juice
Most people think of Florida when it comes to orange juice. Florida was the worlds
leader in orange juice production, but Brazil has taken over the lead in recent years.
The Brazilian climate and fertile arable soil of the nation provides an enormous
potential for growth when it comes to many agricultural commodities in the South
American country.
Sugar
Brazil is the world's leading producer of sugar. A vast majority of Brazil's sugar
production becomes sugar-based ethanol via processing within the nation. Ethanol
filling stations in Brazil are as common as gas stations.
The growth in commodities in Brazil should continue as the nation has a long way to
go to reach its potential. Massive investment in agriculture in recent years should
continue to reap rewards. A modernization of their infrastructure would help

tremendously. Brazil is one of the top commodity producers in the world, but a
modernization of infrastructure will increase their position as one of the world's major
suppliers of food and raw materials.
As one of the largest commodity producers in the world, the Brazilian economy
depends on revenues from raw materials produced in the nation. Therefore, the
Brazilian currency, the real, often moves higher and lower as a result of strong or
weak commodity prices. Commodity currencies are like a basket of commodity prices,
and some people invest in the currency of Brazil or other major commodity producers
like Canada, Australia or Russia when they are bullish on commodity prices. In a
similar way, when bearish on commodity prices, some investors and traders go short
these commodity currencies.

BRAZIL CPI INFLATION

Consumer prices in Brazil rose 8.48 percent year-on-year in September of 2016, easing from
an 8.97 percent increase in August and below market estimates of 8.6 percent. It is the lowest
inflation figure since May last year due to a slowdown in cost of food, transport and housing.
Inflation Rate in Brazil averaged 370.42 percent from 1980 until 2016, reaching an all-time
high of 6821.31 percent in April of 1990 and a record low of 1.65 percent in December of
1998. Inflation Rate in Brazil is reported by the Instituto Brasileiro de Geografia e Estatstica
(IBGE).

Brazil's One Year Infl ation

42614

8.48

42583

8.97

42552

8.74

42522

8.84

42491

9.32

42461

9.28

42430

9.39

42401

10.36

42370

10.71

42339

10.67

42309

10.48

42278

9.93
0

10

12

Inflation

Average Inflation Brazil-By Year

14.78

9.019.45

8.43
7.066.83

6.97

4.86
3.21

6.6 6.88

5.67
4.2

3.64

CPI Inflation

6.63
4.9 5.04

5.4

6.216.33

http://www.tradingeconomics.com/brazil/gdp-from-mining
http://www.inflation.eu/inflation-rates/brazil/historic-inflation/cpi-inflation-brazil.aspx
http://www.focus-economics.com/countries/brazil
https://www.thebalance.com/trading-coffee-futures-809346
https://home.kpmg.com/xx/en/home/insights/2016/01/brazil-mining-guide.html