Brazil enters the second half of 2026 at an interesting crossroads: the economy is losing momentum, yet the commodity engine underpinning its external sector continues to run at considerable speed. Domestic activity has clearly cooled from the strong start to the year, but for the seaborne economy, the more important story is that Brazil’s mining and agricultural sectors remain remarkably resilient. In many respects, therefore, Brazil’s second-half narrative is less about the pace of GDP growth than about the continued ability of its commodity base to generate large export volumes and sustain its trading links with Asia. The slowdown in domestic activity is becoming increasingly visible. The Central Bank’s IBC-Br activity indicator points to growth of just 0.2 percent quarter-on-quarter in Q2, down sharply from 1.1 percent in Q1. The composition of growth also became less favourable: industry expanded by 0.5 percent and agriculture by 0.3 percent during the quarter, but services, the backbone of the Brazilian economy, contracted by 0.1 percent. This moderation was largely anticipated, as the effects of earlier government support measures began to fade while exceptionally restrictive borrowing costs continued to weigh on investment and domestic demand. Yet the broader outlook remains relatively resilient. Forecasts vary considerably, reflecting the unusually uncertain global environment: the OECD expects Brazilian GDP to expand by 1.6 percent in 2026, compared with 2.3 percent in the Brazilian government’s projection, while the IMF recently raised its forecast to 2.4 percent. The IMF’s more constructive assessment reflects favourable terms of trade, continued fiscal support and Brazil’s relative insulation from the global energy shock as a net oil exporter. Monetary conditions, however, remain the principal brake on domestic activity. Inflation continued to moderate in July, with 12- month IPCA inflation easing from 4.64 to 4.44 percent, bringing headline inflation just inside the Central Bank’s 4.5 percent upper tolerance limit. The Central Bank has cautiously begun reversing its previous tightening cycle, but monetary policy remains highly restrictive. The Selic stood at 14.25 percent throughout July following the 25bp reduction in June. Further gradual easing is expected, potentially taking the policy rate towards 13 percent by year-end, although geopolitical uncertainty and energy-related inflation leave little room for aggressive cuts. The resulting policy mix has produced an economy operating at two speeds. High real interest rates are cooling investment and parts of domestic demand, while a resilient labour market, strong commodity production and external trade continue to provide support. The same interest-rate differential has also underpinned the currency: the real appreciated by 2.8 percent against the dollar during July, while the monthly average was 7.66 percent stronger than a year earlier.
For dry bulk, however, the export sector remains the more consequential part of the Brazilian story, and July offered a mixed but ultimately constructive picture across the country’s major commodities. Iron ore exports eased from June’s exceptionally strong 42.0mt to 37.8mt, down 10 percent month-on-month and 7.6 percent year-on-year. The decline nevertheless came after an unusually strong June, while January-July shipments reached 227.1mt, broadly in line with last year. The medium-term outlook remains supportive, underpinned by Vale’s 335-345mt production target and continued demand from major Asian buyers, particularly China and Malaysia. For Capesize shipping, Brazil therefore continues to provide a substantial and relatively dependable foundation of long-haul tonne-mile demand. Agricultural exports provide a second, and increasingly important, pillar of Brazil’s dry bulk contribution. Soybean shipments reached 13.4mt in July, down 7.6 percent from June as the seasonal peak passed, but still 8.9 percent above July 2025. Cumulative exports reached 83mt, 7.4 percent higher year-onyear. China absorbed 9.42mt, or more than 70 percent of July shipments, once again highlighting the extraordinary importance of the Brazil-China corridor to Panamax demand. Corn exports, meanwhile, began their seasonal acceleration as the safrinha crop entered the export programme, rising to 1.94mt from only 0.44mt in June. Volumes nevertheless remained 20.2 percent below July 2025, as strong soybean flows competed for port capacity while early harvesting and logistical delays restrained the initial pace. Sugar exports fell 4.3 percent month-on-month and 16.6 percent year-onyear to 2.99mt, as heavy rainfall disrupted harvesting and mills diverted more cane towards ethanol production. Crude oil exports, while outside the dry bulk sector, provide useful context for Brazil’s wider commodity economy: July shipments fell 9.4 percent monthon-month to 7.7mt, partly affected by the temporary 12 percent export tax, although year-to-date volumes of 59mt remained 6.7 percent above 2025. Taken together, these flows suggest that Brazil’s external sector remains considerably more robust than the headline slowdown in domestic GDP might imply.
The import side adds another dimension to the story. Fertilisers remain by far the most relevant inbound dry bulk commodity and, at the same time, perhaps the clearest illustration of Brazil’s exposure to external geopolitical developments. Total chemical fertiliser imports jumped 24.2 percent month-on-month to 4.1mt in July, although volumes remained 14.4 percent below July 2025. Crucially, lower volumes have not translated into lower expenditure. Disruptions in the Middle East pushed the cost of Brazil’s fertiliser imports around 8 percent above the corresponding 2025 level, increasing agricultural production costs and encouraging some buyers to postpone purchases. This matters well beyond the immediate import numbers. Brazil remains structurally dependent on imported fertilisers to sustain its enormous soybean and corn industries, creating a direct link between inbound dry bulk flows and future outbound grain volumes. Wheat provides a second source of inbound support. Imports rose to 650,300 tonnes in July, the highest monthly volume of 2026 and 5.4 percent above last year, with Argentina accounting for almost 79 percent of the total, benefiting from Mercosur duty-free access and its proximity to Brazil’s southern milling centres. More importantly, domestic wheat production is expected to decline sharply as planted acreage contracts and farmers contend with high input costs. Total 2026 imports are consequently forecast at around 7.0-7.2mt, potentially the highest annual volume in more than a decade.
For dry bulk shipping, therefore, the central message is ultimately more constructive than Brazil’s slowing domestic growth figures might suggest. The economy is losing momentum under the weight of high real interest rates, but the sectors most relevant to seaborne trade remain comparatively resilient. Iron ore continues to provide a large and relatively stable base of Capesize demand, while robust soybean exports and the approaching seasonal acceleration in corn shipments should support Panamax and Kamsarmax employment. At the same time, substantial fertiliser requirements and potentially stronger wheat imports add an important inbound dimension to the smaller bulk segments. Risks, certainly, remain. A sharper slowdown in Chinese commodity demand could weigh on Brazil’s largest export flows; further disruption in the Middle East could push fertiliser and energy costs higher; adverse weather could undermine agricultural output; and a stronger real could progressively erode exporters’ competitiveness. Yet these risks need to be weighed against Brazil’s considerable structural advantages: abundant natural resources, expanding commodity production, a vast agricultural base, deepening trade links with Asia and an enduring dependence on imported agricultural inputs.
Overall, Brazil may be entering the second half of 2026 with a slower domestic economy, but its role in the global commodity system has not diminished. If anything, the divergence between domestic activity and external trade is becoming more pronounced. For shipping, this means that Brazil should be viewed not simply through the lens of GDP growth, but through the far more tangible flows of iron ore, grains and agricultural inputs moving in and out of its ports. In the second half of 2026, Brazil’s economy may be losing speed, but its commodity engine is still generating miles – and for dry bulk, it is the latter that ultimately matters most.
Data source: Doric