Brazil grain exports remain strong in September

Brazilian grain exports are on trend to total 13.6 MMT in August according to AXS tracking, up 20.9% YoY. This would take Brazil’s grain exports in the first 9 months of the year to 120.5 MMT, up 13.2% YoY.

China has remained the largest single market for Brazilian grains, on track to import 2.8 MMT in September. These volumes are down 27.6% YoY and 35.2% on August, however, as stocks of the 2021/22 soybean harvest dry up. Brazil saw a poor soybean harvest of 126m tonnes in the 2021/22 season according to the USDA, down 9.7% YoY.

Corn exports are on trend to almost double YoY to 4.5 MMT in September, mostly to markets in South America, Europe, and the Middle East. According to USDA estimates, Brazil harvested 116 MMT of corn in 2021/22, up 33.3% YoY.

The trade is primarily benefiting the Panamaxes, with shipments on trend to increase by 16.7% YoY to 9.6 MMT in September. Supramaxes, however, have also seen more demand from Brazilian grains in the past few months, with liftings on track to total 2.8 MMT in September, a four-fold YoY rise.

OECD cuts global growth forecasts in mid-year update

In its mid-year economic outlook published this week, the OECD cut its 2023 global growth forecast by 0.6% to 2¼ per cent. This is down from a prediction of 3% growth in 2022. The organization cited increasingly widespread and entrenched inflation following Russia’s invasion of Ukraine as the main economic risk, particularly in Europe.

Euro area headline inflation is forecast to increase from 2.6% in 2021 to 8.1% in 2022, falling back to 6.2% in 2023. The tighter monetary policies needed to bring this inflation under control, demand destruction from higher prices, and energy shortages are expected to cause Euro area real GDP growth to fall from 5.2% in 2021 to 0.3% by 2023.

While strong EU imports of coal amid the ongoing energy crisis has supported overall dry bulk volumes, imports of other commodities have more closely reflected a slowdown in EU industry.

According to AXS tracking, EU dry bulk imports excluding coal fell by 3.1% YoY in August to total 30.0 MMT. Iron ore imports fell by 6.8% to 7.7 MMT, bauxite by 28.5% to 900k tonnes, steel by 15.8% to 2.6 MMT, and minor ores (such as alumina, manganese, and copper) by 65.3% to 900k tonnes.

The OECD is also forecasting a slowdown in Chinese growth to 3.2% in 2022, caused by strict Covid lockdowns and a weak property sector. Growth is predicted to recover in 2023 to 4.7%, however, supported by expected widespread government stimulus measures.