Prices of key commodities in Latin America, such as copper or soybeans, have risen in 2020 and have rebounded, even rising above pre-pandemic levels, a ball of oxygen for the recovery of the region’s damaged economies. according to experts consulted by Efe.
“The rise in commodity prices could greatly help the recovery of Latin America, especially in South America, which is the major global supplier of commodities,” IE economist Juan Carlos Martínez Lázaro, professor at IE, told Efe. He once said that higher prices will “improve trade balances, tax balances and government revenues.”
“This is good news for emerging countries, especially Latin American countries. The long-awaited economic recovery could be less complicated than previously expected,” said Carlos Malamud, principal investigator at the Elcano Royal Institute.
After setting minimums at $ 2.09 a pound (equal to 0.45 kilos) in March, due to the incarceration in most of the world, commodities such as copper – of which Chile is the main world producer, are ending, followed by Peru – this year at a revaluation of 27% (in 2019 it ended at $ 2.79 per pound and changed to 3.56 this Thursday).
Soybean futures – with Brazil, Argentina and Paraguay in the “top five” of producing countries – have delivered a 34% increase since this year they have gone from $ 9.43 per bushel (Anglo-Saxon measure of capacity corresponding to 27,216 kilograms) to $ 12.63. The year low for soybeans was recorded on April 21 at $ 8.08 per bushel.
Another mineral that has been appreciated in 2020 is silver, which has among its main producers Mexico and Peru. This metal, which fell to its annual low of $ 12 per troy ounce (31.1 grams) on March 18, registered its maximum price above $ 29 in August and is changing to about $ 26 by the end of the year, which is an increase from 43% implies (last day of 2019 was trading at $ 18.15).
CHINA RECOVERY AND WEAK DOLLAR
The reasons for this increase include the recovery of global economic activity, which is particularly intense in the Chinese industrial sector, and the weakness of the dollar (the euro is up nearly 9% this year from $ 1,222) as a weak dollar normally means that commodity prices are higher and vice versa, explains Martínez Lázaro.
“We must not forget the expectations that are being raised about the recovery of economic activity in 2021 when the vaccination processes have already been announced. This predicts that the health situation could stabilize in the coming year,” he added.
He also recalled that increases such as those experienced by the price of soy are likely to be influenced by “the drought experienced in South America which predicts that next year’s harvests may not be as plentiful as previously thought. “
NOT ALL
However, experts recall that not all commodities are rising, as oil prices remain lower than at the beginning of the year, as it is not yet foreseen that demand for crude oil can normalize in 2021.
Barrel Brent, a benchmark in Europe, has risen from $ 66 at the end of 2019 to $ 51 the day before, down more than 22% (the minimum for the year was set at $ 15.98 on April 22). one of the worst performing commodities this year, according to the financial intermediary IG.
This company has also highlighted that the year was also very complex for live livestock futures (which are down nearly 9%, going from $ 1.26 to $ 1.15 per pound -435 grams, with a minimum of 0.77 dollar.last April 6).
The price of coffee has fallen nearly 3% this year as the Arabica variety changed to nearly $ 0.13 a pound at the end of 2019, while it traded at $ 0.126 on Thursday (it recorded the year’s minimum on June 15 for $ 0.093).
Rice depreciated 6.5% (the year ended at $ 12.28 per hundred, equal to 45.36 kilograms, and started at $ 13.14), due to the impact of the virus on demand.
FORECASTS FOR 2021
Looking ahead to 2021, experts predict a recovery in oil prices to the extent that economic activity, particularly travel, trade and traffic, recovers.
For the rest of the commodities, according to IG, “prices will remain high” as “there is a lot of liquidity worldwide and many investors will have to turn to commodities to achieve returns that are difficult to achieve in other markets today”. during the day “.
“In any case, let’s hope that 2021 is the year of the recovery of the world economy and also of the stabilization of commodity prices,” he concludes.