JOC Insights by Mario Moreno: U.S. Containerized Trade with South America on the Rise
Published:20 May 2015 01:05:39 PST
U.S. IMPORTS FROM SOUTH AMERICA UP FOR SIX CONSECUTIVE MONTHS
Total container imports from South America advanced 5.2 percent in August after rising 6.8 percent in July, and totaled 74,520 TEUs. Shipments from the region are up for six consecutive months on a year-over-year basis. Month-to-month, imports from South America declined 1.5 percent in August.
Inbound trade from the east coast of South America totaled 31,890 TEUs in August, down 5.9 percent from August 2012. Losses were mostly seen in tobacco, auto tires and auto parts. Imports from the west coast of South America rose 15.4 percent in August to a total of 42,630 TEUs, boosted by gains in bananas, auto tires and mandarin oranges.
The upward forecast revision for 2014 is partially based on improvements in the U.S. housing industry that are drawing increasing levels of regionally produced inputs. Construction inputs such as granite, forest products and tiles will be the primary bene-ficiaries. Although I am wary of a predicted rise in U.S. interest rates during the coming year, I do not believe it will substantially limit U.S. housing construction in the near-term.
In terms of agricultural products, it appears the coffee trade is back on track. Although I am cautious of its longevity, forecasts for Brazilian coffee output are generally upbeat. In spite of July frosts that have depressed output in the Brazilian state of Parana, Brazil’s overall coffee output is expected to swing upward again next season, as trees make their biennial shift to high from low production.
With respect to exchange rates, the U.S. dollar continued to make strides against both the Brazilian real and the Argentine peso.
U.S. EXPORTS TO SOUTH AMERICA ROSE IN SEVEN OF THE LAST NINE MONTHS
Trade to South America advanced 3.7 percent year-over-year in August totaling 93,887 TEUs, after an 8.1 percent gain in July. On a month-to-month basis, exports expanded 4.1 percent.
Southbound shipments to the east coast of South America totaled 49,879 TEUs in August, up 1.9 percent from a year earlier. Gains were led by agricultural machinery and PVC resins. Southbound trade to the west coast of South America increased 6.0 percent year-over-year to a total of 44,008 TEUs, mostly because of rising demand for petro products, wood pulp and raw cotton.
Growth in containers to the east coast of South America is expected to be basically flat in 2013 (minus-0.1 percent). This is an improvement from the previous forecast, which called for a 5.0 percent contraction. Recent economic news from Brazil has been somewhat encouraging, with second quarter GDP growth at the fastest pace in more than two years. In addition to agricultural output, investment was also stronger, which should help drive demand for U.S. industrial inputs.
Going forward, I am cautiously optimistic about 2014 and 2015, with export demand forecast to expand by an average of 4.0 percent annually. Brazil will remain at the forefront of growth. While the value of the real will continue to limit the price competitiveness of U.S. products, new intervention policy by the Brazilian central bank should minimize currency volatility, thereby aiding investment and export demand.
Demand for paper and paperboard is basically flat through August, while demand for synthetic resins is down sharply, underscoring a bit of weakness in investment activity. Nevertheless, demand for petro products is up markedly by 227 percent through August.
More of Moreno’s trade and economic analysis can be obtained by subscribing to JOC Insights or by following him on Twitter@MarioMoreno_JoC.
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