Prices of key raw materials in Latin America, such as copper or soybeans, have risen throughout 2020 and have recovered and even surpassed pre-pandemic levels, an oxygen balloon to recover damaged economies in the region. according to experts consulted by Efe.
“Rising commodity prices can go a long way in reviving Latin America, especially in South America, which is the world’s largest supplier of raw materials,” economist Juan Carlos Martínez Lázaro, a professor at IE, told Efe. He once indicated that higher prices “will improve trade balances, fiscal balances and public revenues.”
“This is good news for emerging countries, especially Latin American countries. The long-awaited economic recovery may be less complicated than previously expected,” agreed Carlos Malamud, principal investigator at the Elcano Royal Institute.
After setting lows of $ 2.09 per pound (equivalent to 0.45 kilograms) in March as a result of confinements in most of the world, raw materials such as copper – of which Chile is the world’s largest producer, followed by Peru – ends this year with a revaluation of 27% (in 2019 it ended at $ 2.79 lira and on Thursday it changed to 3.56).
Soybean futures – with Brazil, Argentina and Paraguay in the top five of producing countries – grew by 34% this year they went from $ 9.43 per bushel (the Anglo-Saxon measure of capacity which is equivalent to 27,216 kilograms) to $ 12.63. The annual low for soybeans was recorded on April 21 at $ 8.08 per bushel.
Another mineral that has appreciated over the year 2020 is silver, which has among its main producers Mexico and Peru. This metal, which fell to an annual low of $ 12 an ounce (31.1 grams) on March 18, peaked above $ 29 in August and is trading at about $ 26 near the end of the year. which implies a 43% increase (the last day of 2019 was traded at $ 18.15).
CHINA RECOVERY AND WEAK DOLLAR
Reasons for this growth include the recovery in global economic activity, which is particularly strong in the Chinese industrial sector, and the weakness of the dollar (the euro appreciated by almost 9% this year, from $ 1,124 to $ 1,222), as normally a weak dollar implies that commodity prices are higher and vice versa, explained Martínez Lázaro.
“We must not forget the expectations that are generated regarding the recovery of economic activity in 2021, once the vaccination processes have already been announced. This augurs that the health situation could stabilize throughout the next year,” he added.
He also recalled that increases such as soybean prices are likely to be influenced by “the drought in South America, which predicts that next year’s crops will not be as abundant as previously thought.”
NOT ALL UP
Experts still remember that not all raw materials are growing, as oil keeps prices below what they were at the beginning of the year, whereas oil demand is not yet expected to return to normal in 2021.
The Brent barrel, a benchmark in Europe, rose from $ 66 at the end of 2019 to $ 51 the day before, a drop of more than 22% (the low for the year was set on April 22 at $ 15.98), one of the weakest performances this year, according to financial intermediary IG.
This company also pointed out that the year was also very complex for the future of live cattle (which accumulated a decrease of almost 9%, going from $ 1.26 to $ 1.15 per pound -435 grams-, with a low of $ 0.77 last April 6).
The price of coffee has dropped by almost 3% this year, as at the end of 2019 the Arabica variety was exchanged at almost $ 0.13 per pound, while on Thursday it was trading at $ 0.126 (recorded the lowest for the year on June 15 at $ 0.093).
Rice depreciated by 6.5% (the year ended at $ 12.28 percent, the equivalent of 45.36 kilograms and started at $ 13.14), due to the impact of the virus on demand.
FORECASTS FOR 2021
Looking to 2021, experts predict a recovery in oil prices as economic activity, especially travel, trade and traffic, recovers.
In the rest of the commodities, according to IG, “prices will remain high” because “there is a lot of liquidity worldwide and this makes many investors seek refuge in commodities to obtain returns that in other markets are difficult to obtain today in day “.
“In any case, we hope that 2021 will be the year of the recovery of world economic activity and also of the stabilization of the price of raw materials,” he concluded.