São Paulo – Agricultural commodities, among them sugar, should see prices return to levels similar to those prior to September, without great reflex on Brazilian exports. The opinion is by Archer Consulting director Arnaldo Luiz Corrêa, who specializes in the sugar market. The product is among those most exported by Brazil to the Arab world and suffered one of the highest price drops among commodities last month, a movement that was highly influenced by the economy of the Euro Zone.
"It was only a moment of great concern,” said Corrêa, mentioning problems faced by the Greek and Spanish economies, which raised red flags. The concern with the future of Europe resulted in investors leaving assets in agricultural commodities – and commodities in general – and investing their money in other areas considered safer in the current scenery, like the dollar and gold. Last week, sugar started its recovery on the New York Stock Exchange, with investors making use of low prices after the strong depreciation of September, over 10%.
The commodity analyst at Cerealpar, Steve Cachia, stated that the future of commodity prices as a whole is still uncertain and that it depends mainly on some decisions that should be taken in the Euro Zone in early October and that should influence the route of the economy of the region.
"If there is a saving solution, the good mood should increase commodity prices again,” said Cachia. The analyst stated that there is still some space for the price to drop, but recalls that fuelling the recovery of agricultural commodities is the strong international demand, mainly in Asia. "You may postpone a car purchase, or that of a new house, but everyone has to eat,” said Cachia.
Corrêa understands that the commodity price drop should not go on much longer and should not have great reflexes on Brazil’s exports. On the Brazilian market, in fact, the effects of lower commodity prices were reduced by appreciation of the dollar. The director of Archer Consulting believes that sugar was one of the most affected products as the price had much space for reduction, as it was very high.
*Translated by Mark Ament
