Brazil has exported 31,4 billion US$ agriculture products in the first half of 2009, the Ministry of Agriculture just announced.
Last June only, Brazil exported 7,4 billion US$ of agriculture products. That is 12% higher than the same period 2008, which was equally a record year. June 2009 was is the second-largest historic export year, only July 2008 topped it with exports of 7,9 billion US$.
Interesting also: Asia took 27,1% of this H1 2009 export, overtaking the European Union as the first export destination of Brazilian agriculture export. China alone took 16,9% of this, followed by the Netherlands and only then the United States (7%). Russia and Germany follow with a vast multitude of other countries: the export of Brazil is extremely diversified these days.
We are (strong) believers in the prospects of agriculture. Early July we bought in Powershares DB Agriculture Fund, Monsanto and Potash. But you could also plainly just buy coffee, wheat, corn,…
Specifically wheat is an interesting case. Especially for Brazil. Wheat is produced allover the world. It provides almost 20% of the calories consumed in the world; which means that demand is not at all elastic or discretionary. This year would be again a big crop year, the 656 million ton would only be 26 million ton less than last year. However, there is a time bomb ticking for wheat production called Ug99.
The fungus could wipe out more than 80% of the world’s wheat crops and is spreading from Africa.
Ug99 is an enormous threat as Rob Graf quotes in the Citizen article:
Let’s be clear on this: Ug99 doesn’t just represent an inconvenient disease that might reduce yields somewhat. It is a fungus that totally destroys wheat wherever it appears, as surely as a wildfire or plague of locusts. And not only that, it seems that many varieties of barley and oats are also susceptible to being destroyed by Ug99. And as I reported in 2006, plant scientists warn that at least two other similar plant diseases called stripe rust and leaf rust “also loom large” as threats to the world’s grain supply.
Brazilis nearly not importing any Agriculture products itself; it only imported 5,1 billion US$ in the first half of this year. A decrease of 9,6% compared to 2008, mainly due to the decrease of wheat prices. Wheat is onbe of the few agriculture products for which Brazil is dependent on import (from Argentina). Brazilian tropical climate is not very suitable for growing wheat. Only in Brazil’s coldest states, Parana and Rio Grande do Sul, wheat is produced.
However, Brazil has a plan to also get rid of the 6,6 million ton of wheat import from Argentina. The plan is to do irrigated wheat production in the central region of Brazil (with abundant water resources). To make the plan sustainable, the minimal prices for wheat would have to go up; which they surely will in our opinion.
This would mean that Brazil would become truly self-sufficient (0% import) for minerals, energy (electricity, petrol and gas) and agriculture; both in the short and long term.
