(Bloomberg) -- Brazil is expected to import the most diesel in two years this month as farmers harvest the corn crop and the country’s resilient economy supports demand from truckers.
Diesel imports are expected to touch 452,000 barrels a day in October, according to maritime intelligence firm Kpler. That follows strong imports in September as farmers rev up machinery to collect the corn crop, which is mostly trucked to ports and consumer centers.
Brazil’s central bank recently raised its 2024 growth forecast as Latin America’s largest economy expands in line with the most optimistic estimates. The country’s total demand for diesel — a bellwether of economic activity as most of the nation’s goods are moved by truck — has been growing for the past three months and reached a one-year high in August.
But Brazil’s refineries don’t produce enough diesel, leaving it chronically short of the fuel. Most of the country’s imported supplies have been coming from Russia, which has been shunned by buyers Europe and the US. Now, with Russia’s refineries undergoing maintenance and US diesel prices sinking, the US has been able to expand its share of Brazil’s imports.
“Russian diesel kind of dominated the scene since last year,” said Felipe Perez, head of Latin America fuels and refining research and strategy at S&P Global. However, “the differential between Russian diesel and US Gulf Coast diesel is disappearing.”
Hedge funds last month turned the most bearish on diesel on record in data going back to June 2006, according to CFTC data, with sentiment hurt by a weakening global economic outlook.
The competition for diesel shipments to Brazil may heat up as the Dangote refinery in Nigeria and the Dos Bocas facility in Mexico become fully operational, potentially causing an oversupply, Perez said.
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