Brazil’s manufacturing and service sectors take a hit as the April PMI shows the country dropped in its service sector. Reuters notes, “Growth in Brazil’s services sector slowed in April as business sentiment soured, a survey showed on Tuesday, suggesting companies increasingly expect little of the windfall they once hoped would come with hosting the upcoming soccer World Cup.
HSBC’s Purchasing Managers Index for Brazilian services dropped on a seasonally adjusted basis to 50.4 in April from 51.0 in March. A reading above 50 indicates growth.”
In addition to concerns over the cooling economy, Brazil’s exports continue to decline. This time oil is at the top of the list, with lower than average exports based on annual readings.
According to a report by Bloomberg News, “Brazil will ship 395.8 million gallons (1.5 billion liters) this year, down 46 percent from last year’s 738.8 million gallons, Enrico Biancheri, commercial officer at Sao Paulo-based Biosev SA (BSEV3), said. That’s the lowest since 2003.”
In addition to the bleak outlook on oil, Brazil continues to experience a coffee crunch. Brazil will also see lower than average exports of soybeans as China cancelled its purchases in April. Brazil is one of the top exporters of coffee and soybeans.
Despite slower than average exports, Brazil plans to open two new export terminals for oilseed and grain. Officials hope these terminals will provide a new pathway for producers to empty their overflowing supply.
According to The Wall Street Journal, “The Miritituba and Barcarena terminals, both in the state of Pará, cost the commodities company 700 million reais ($316 million). Once the terminals are operating at full steam, Bunge said it would have the capacity to export a total of 35 million tons of grains and oilseeds a year from Brazil via its own and third-party terminals.”