Brazil May Miss Export Target Due to Heavy Rains and Low Oil Prices

Welber Barral Brazil may not reach its US$ 202 billion export target for this year due to the international situation and Brazil's tragic floods, admitted this Monday, December 1st, the Foreign Trade secretary of the Brazilian Ministry of Development, Industry and Foreign Trade, Welber Barral.

According to him, the great drop in the price of oil in recent weeks and the destruction of Itajaí­ port, in Santa Catarina state, by heavy rains in southern Brazil, should create difficulties for Brazil to reach the forecasted target.

Even if exports are below the total estimated, the secretary said that the result, anyhow, will be positive. "If we do not reach the target, we will get very close. We may end the year with at least US$ 200 billion in foreign sales, which are already record," said Barral, on commenting the trade balance result for November.

From January to November, exports totaled US$ 184,125 billion. To reach the US$ 202 billion target, Brazil needs to sell abroad US$ 16 billion this month. For this, Brazil needs to export around US$ 2 billion more than the US$ 14.2 billion registered in December last year, within a scenery of lower foreign trade, both in exports and in imports.

Last month, Brazil registered a positive balance of US$ 1.613 billion in the trade balance, as a result of exports of US$ 14.753 billion and imports of US$ 13.140 billion. For November, the values are record, but they represent less than the total expected by the Ministry of Development.

Taking into consideration seasonal factors, which include typical oscillation in indices according to the time of the year, the government expected a reduction of 2% in exports in October and November. Foreign sales, however, dropped 12.3% in the months. With regard to imports, the Ministry estimated an increase of 6%, but the drop was 16.5%.

According to Barral, the main factor for the reduction of exports was the sudden drop in oil sales, with the barrel dropping from US$ 99.7 in October to US$ 65.1 in November, bringing a negative impact of US$ 600 million. He also pointed at the reduction of shipments of iron ore, caused mainly by a dispute between mining giant Vale do Rio Doce and Chinese importers, reducing sales by US$ 490 million.

The secretary also pointed out the stops in Itajaí­ port, from where 4% of Brazilian exports leave the country, due to floods in the state of Santa Catarina. Stopped since the 21st of November, the losses due to lack of exports from the unit reached US$ 370 million in ten days.

According to the Ports Secretariat, it should take between 30 and 60 days for the port to return to operation at 50% of its capacity. The full reconstruction should take at least a year and a half.

Barral avoided projections for 2009, but he admitted that the country should have greater difficulty to maintain the rhythm of foreign sales next year.

"A reduction in exports in 2009 should depend on the performance in the second half of the year. The first half will be very hard. We hope that the second half, with liberalization of trade, will be better," he noted.

ABr

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