A Deeper Look At Brazil’s Commodity Industry

Energy

Brazil is increasingly becoming a player on the global energy scene, with recent discoveries of massive oil and gas reserves off Brazil’s coast. While these reserves could well make Brazil a major oil producer on a global scale, Brazil’s status in biofuels (especially ethanol) has a much longer history and adds a few unique elements to Brazil’s status in the global energy market [see also 5 Of The Biggest Oil Finds In History].

In terms of oil, Brazil is already the ninth-largest producer in the world at about 2.7 million barrels per day (and #13 with 2.1 million barrels per day of crude production). Brazil is also the world’s sixth-largest consumer of oil, so the country actually had a net deficit of about 100,000 barrels per day in 2011. Nevertheless, oil exports do make up more than 8% of Brazil’s total.

Brazil is not much of a player in coal, at least not on the production/export side. Brazil does produce more than 6 million tons of coal (primarily from mines in Rio Grande do Sul and Santa Catarina), but must import a significant percentage of its needs. Brazil is also not presently a large player in natural gas, either as a producer or consumer. With those offshore discoveries significantly boosting reserves, though, this could change, provided that other countries build the necessary LNG infrastructure to allow for easier importation of natural gas.

Unlike most countries, ethanol features prominently in Brazil’s energy outlook. With a climate that is very nearly perfect for sugarcane, Brazil has been among the most aggressive countries in mandating and promoting ethanol use as a light vehicle fuel. Brazil is presently the world’s second-largest biofuels producer, producing close to 6 million gallons in 2011 (largely ethanol). Due in part to strong internal demand, but also import restrictions in countries like the U.S., Brazil exports less than 10% of the ethanol it produces.

Agriculture

Brazil is also a major player in global agricultural production. About 20% of the Brazilian workforce is engaged in agriculture, and more than a quarter of the country’s export earnings come from agricultural exports [see also Invest Like Jim Rogers With These Three Agriculture Stocks.

Brazil is the world’s leading producer of sugarcane, pineapples, cashews, coffee, sisal and oranges, and a major producer of other commodities like papayas, tobacco, beef, soybeans, corn, chicken and palm. In terms of exports, Brazil is the world’s largest exporter of sugar. Brazil produces about 20% of the world’s annual supply, and 50% more than India. Brazil is also the world’s leading exporter of chicken and coffee, and the second-largest exporter of soybeans behind the United States.

In dollar terms, sugar/sugarcane contributes more than 6% to Brazil’s export totals, with soybeans contributing 5%, and poultry and coffee contributing almost 3% each.