LATAM-related commodities show mild recoveries

LATAM-related commodities show mild recoveries

On a day marked by reduced activity due to holidays in Brazil and Argentina, prices of key exports from the region exhibit slight improvement.

Soybeans, wheat, and corn show a mild recovery.

Soybeans, wheat, and corn show a mild recovery of approximately 1%.

These crops represent the majority of Argentina’s exports and a significant portion of Brazil’s. The downward trend in 2023 was devastating in terms of tax revenue.

In the case of soybeans, after peaking at $650 in 2022 due to the Russo-Ukrainian conflict, soybeans plummeted to $439 per ton presently. This is crucial for LATAM since soy constitutes Argentina and Paraguay’s primary export and Brazil’s third.

The production and export of soybeans often constitute a significant portion of the Gross Domestic Product (GDP) of the mentioned Latin American countries

The demand for soybeans is primarily driven by countries like China, which uses soybeans for both animal and human consumption, as well as for the production of soybean oil and other derivative products.

The revenues generated from soybean exports are necessary for domestic economies, whether through investments in infrastructure, education, or social programs. This holds especially true in countries like Argentina.

The slowdown of the Chinese economy has been a matter of global interest and concern lately. Over the past decades, China has experienced extraordinary economic growth, becoming one of the world’s leading economic powers. However, in recent years, a deceleration in its growth rate has been observed.

The second-largest economy in the world grapples with a multitude of challenges. These encompass a record decline in real estate, mounting debt, a declining birthrate, and a shrinking workforce.

An additional significant factor fueling the ongoing bear market in the Chinese stock market is the worsening of relations with the United States and the broader West. In recent years, tensions between China and Western nations have intensified due to China’s heightened assertiveness in economic and military expansion efforts.

Significant differences are evident between the major financial hubs in the West and Asia. While the S&P 500, a key index in the United States, is achieving record levels, the Shanghai Shenzhen CSI 300 is close to its lowest point in 5 years.

Indeed, within merely three years, Chinese stocks have plummeted by around $6 trillion, roughly double the annual economic output of Britain.

China’s diminishing demand for soybeans amidst its phase of sluggish growth will significantly impact Latin America, particularly its economy.

 

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
ABOUT THE AUTHOR See More
Ignacio Teson
Economist and Financial Analyst
Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.
Related Articles
Comments
0 0 votes
Article Rating
Subscribe
Notify of
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

Add 3442

Add 3440

XM

Best Forex Brokers