Exports of lumber from the major producing states of the Brazilian Amazon slowed in the first half of 2020.

 

Export value of Amazonian rough sawn lumber slows

According to official statistics published by Brazil’s Minister of Development, Industry and Foreign Trade (MDIC), the Amazonian state of Mato Grosso is the largest exporter of Brazilian rough sawn lumber, accounting for 27.1% of Brazilian exports (by value).

Screen Shot 2020-07-29 at 10.05.59 PM

On an annualized basis, the value of rough sawn lumber exports from Mato Grosso decreased 12.29% during the first half of 2020.

Mato Grosso Rough Sawn Lumber Exports 2019 vs. 2020_

In the first half of 2020 Mato Grosso exported US$ 13.2 Million worth of lumber. In 2019, Mato Grosso exported US$ 30.1 Million for the year.

This contraction in the rate of lumber exports was not limited to Mato Grosso. The Amazonian state of Pará saw an even bigger slow down in rough sawn lumber exports.

The value of rough sawn lumber exports from Pará during the first half of 2020 totaled just US$ 4.2 Million. In 2019, Para exported US$ 11.5 Million. On an annualized basis, this amounts to a decrease of 26.95%.

Pará Rough Sawn Lumber Exports 2019 vs. 2020_

In 2019, Pará accounted for 13.2% of Brazilian rough sawn lumber exports by value, but only 8.66% in the first half of 2020.

 

Value-added lumber product exports from the Amazon also slow down

Value-added lumber products from the Brazilian Amazon (classified by MDIC as “Madeira, parcialmente trabalhada e dormentes de madeira”), also experienced slower exports by value.

The Amazonian state with the highest export value of value-added lumber products in the first half of 2019 was Pará.

Screen Shot 2020-07-29 at 4.26.13 PM

Exports of value-added lumber products from Pará in the first half of 2020 totaled US$ 95.5 Million. In 2019, Pará exported US$ 207 Million. On an annualized basis, the export value in 1H 2020 represents a decrease of 7.7%.

Value-Added Lumber Exports 2019 and 2020_

On an annualized basis Mato Gross is on pace for a 16.4% decrease (US$ 46.8 Million exported in 1H 2020, while US$ 112 Million was exported in 2019).

And in Rondônia, exports were even slower on pace for a decrease of 17.01%.

 

A slow down in exports, or a weaker Brazilian Real?

One of the explanations for a slower rate of exports (by value) could be the weaker Brazilian Real (BRL).

In May, the BRL reached nearly 6 Brazilian Reais to the U.S. Dollar.

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Hypothetically, this meant that a cubic meter of Ipe decking could be sold for US$ 1,678 and yield the same amount of BRL that a cubic meter of Ipe decking priced at US$ 2,580 in May 2019 would – $R 10,000.

$R10,000 in USD April 2019 vs May 14, 2020 (1)

While weaker BRL currency exchange rates are likely partly responsible for the lower values of Brazilian lumber exports from the Amazon, we can control for this by looking at the actual volumes exported.

 

Lower volumes of Brazilian hardwoods shipped to the United States

The United States is one of the major export destinations for lumber from the Brazilian Amazon.

According to some accounts, the U.S. market remained more resilient than others during the early days of the COVID-19 pandemic.

Despite this, the volumes of tropical hardwood lumber imported into the United States from Brazil dropped 24.2% in the first half of 2020. In 2019, the U.S. imported 31,092 cubic meters in 1H versus just 23,564m3 in 1H 2020 (U.S. Census Bureau Trade Data).

bar chart of US lumber imports from brazil 1H 2019 vs 1H 2020

Imports of Ipe, which accounted for 54.7% of all U.S. tropical hardwood lumber (product) imports from Brazil in 2019 (m3), decreased 21.4% in 1H 2020. In 2019, the U.S. imported 19,787 cubic meters in 1H versus 15,541m3 in 1H 2020.

U.S. imports of Ipe lumber products from Brazil (m3) 1H 2019 vs. 1H 2020.

Jatobá, which accounted for 28.0% of all U.S. tropical hardwood lumber imports from Brazil in 2019 (m3), decreased 14.5% in 1H 2020. In 2019, the U.S. imported 6,199 cubic meters in 1H versus 5,300m3 in 1H 2020.

U.S. imports of Jatobá lumber from Brazil (m3) 1H 2019 vs. 1H 2020

So, even with a more competitive exchange rate, U.S. imports of Brazilian tropical hardwood lumber were down, by volume. This echoes the value-based data from Brazil that exports of lumber from the Brazilian Amazon were down in the first half of 2020.

 

Slower Amazonian lumber exports a result of weaker demand

While COVID-19 induced sawmill shutdowns certainly limited production for several months, the underlying factor in the slower lumber exports from the Brazilian Amazon appears to be softer demand. This is supported by reports of customers reducing volumes, delaying delivery, and negotiating reduced prices.

What’s interesting is that while exports slowed and demand appeared to wane, seizures of illegal wood in the Brazilian Amazon surged.

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