MercoPress. South Atlantic News Agency

Brazil heading for another record trade surplus close to 30 billion dollars

Soy and iron ore are the country’s main exports

Brazil posted a trade surplus of 2.355 billion dollars in October, beating forecasts for a third straight month, outpacing imports in the final days of the month following a recovery in global commodities prices.

The surplus reported by the trade ministry was the highest for the month of October since 2007. Brazil, the world's No 2 exporter of soy and iron ore, had a trade surplus of 3.1 billion dollars in September.

A weaker Real helped lift exports at the same time that a recovery in global commodities prices driven by higher risk aversion improved terms of trade for Brazilian exporters, he said. The Real regained some ground in October, but remains more than 4% weaker year to date.

A stronger Real and robust domestic demand for most of the year had boosted imports while higher terms of trade lifted export revenues. But local demand is now starting to show signs of weakness, with growth in Brazilian economy expected to slow to around 3.5% this year after surging by 7.5% in 2010.

Europe's debt crisis is also expected to affect the local economy, despite Brazil's robust export performance.

Nevertheless the government maintained its trade surplus estimate at 27 billion this year, but many in the market see the trade surplus closer to 30 billion this year.

In 2010, Brazil's trade surplus dwindled to 20.3 billion from 25.3 billion in the previous year as the strongest economic expansion in nearly three decades, coupled with a strong currency, increased demand for imports.

In October, exports reached 22.140 billion, down from 23.285 billion in September, but up from 18.381 billion in October of last year. Imports last month totalled 19.785 billion, compared with 20.211bn in September. In the year-ago period, imports were 16.554 billion dollars.