Prices of key raw materials in Latin America, such as copper or soybeans, have risen throughout 2020 and have recovered and even surpassed prepandemic levels, an oxygen balloon for the recovery of the damaged economies of the region, according to experts consulted by Efe.
“Rising commodity prices can help a lot in the recovery of Latin America, especially in South America, which is the major global supplier of raw materials,” economist Juan Carlos Martínez Lázaro, a professor, told Efe of IE, while indicating that higher prices “will improve trade balances, fiscal balances and public revenues.”
“This is good news for emerging countries, especially for Latin American countries. The long-awaited economic recovery could be less complicated than previously anticipated,” agreed Carlos Malamud, principal investigator at the Royal Elcano Institute.
After setting lows in March at $ 2.09 a pound (equivalent to 0.45 kilos), the result of confinements in most parts 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 27% revaluation (in 2019 it ended at £ 2.79 a pound and this Thursday it changed to 3.56).
Soybean futures – with Brazil, Argentina and Paraguay in the “top five” of producing countries – has accumulated a rise of 34% as they have gone this year from $ 9.43 per Bushel (Anglo-Saxon capacity measure equivalent to 27,216 pounds) to $ 12.63. The soybean year low was recorded on April 21 at $ 8.08 per Bushel.
Another mineral that has been revalued throughout 2020 is silver, Which has among its main producers Mexico and Peru. This metal, which fell to an annual low of $ 12 a troy ounce (31.1 grams) on March 18, peaked above $ 29 in August and is nearing completion. in the year, it changes to about $ 26, implying a rise of 43% (the last day of 2019 was trading at $ 18.15).
CHINA RECOVERY AND WEAK DOLLAR
Among the reasons for this rise are the recovery in world economic activity, which is being especially intense in the Chinese industrial sector, and the weakness of the dollar (the euro has revalued this year by almost 9% , going from $ 1,124 to $ 1,222), as usually a weak dollar implies that commodity prices are higher and vice versa, Martínez Lázaro explained.
“We must not forget the expectations that are being generated about 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 year coming, ”he added.
He also recalled that rises such as the one experienced by the price of soybeans are probably influenced by “the drought that is being experienced in South America and that predicts that perhaps next year’s crops will not be as abundant as I thought”.
NOT ALL GO UP
Experts remember, however, that not all raw materials are going up, as oil keeps prices below what it was at the beginning of the year, as it is not yet foreseen that the demand for crude oil can normalize in 2021.
Brent’s barrel, a benchmark in Europe, has gone from $ 66 at the close of 2019 to $ 51 the night before, implying a drop of more than 22% (the year low marked the 22nd of April at $ 15.98), one of the worst-performing commodities this year, according to financial intermediary IG.
This firm also noted that the year has also been very complex for live cattle futures (which have accumulated a drop of close to 9% to 1.26 to 1.15 dollars per pound -435 grams-, with a minimum of $ 0.77 as of April 6 last year).
The price of coffee has dropped by almost 3% this year, as at the close of 2019 the Arabian variety was trading at almost $ 0.13 a pound, while this Thursday it was trading at $ 0.126 (recorded the lowest in the world). ‘year on June 15 at $ 0.093).
Rice depreciated 6.5% (ending the year at $ 12.28 per cent, equivalent to $ 45.36 a pound, and started at $ 13.14 per cent), as a result of the virus’s impact on demand.
FORECASTS FOR 2021
Looking ahead to 2021, experts predict a recovery in oil prices, as economic activity, especially travel, trade and traffic, recovers.
In other commodities, according to IG, “prices will remain high” as “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 expect 2021 to be the year of the recovery of world economic activity and also of the stabilization of the price of raw materials,” he concluded.