Commodities rise sharply, put pressure on prices
With moderate variations in March - except for the surge of grains this Tuesday - the international prices of the main agricultural commodities exported by Brazil continued at a high level and closed the first quarter with averages higher than the same period in the last years. Brazil leads the world in soybean production and exports.
The prices of metal and energy commodities have also risen in the foreign market. In the case of iron ore, the average price is 87.6% higher than the value from January to March 2020. The average price of Brent crude oil, on the same basis of comparison, rose by 20.6%.
These increases contributed to the highest level in Brazil's terms of trade since 2011. Given by the ratio between average export and import prices, this indicator in February was 16% higher than the same month in 2020, according to Fundação Getulio Vargas's Brazilian Institute of Economics (Ibre-FGV). This will help achieve a robust surplus in the trade balance, but at the same time, it already puts pressure on prices in the domestic market. The Wholesale Price Index (IPA), measured by Ibre/FGV, reached 42.6% in the 12 months to March. The General Market Price Index (IGP-M) rose 31.1% in the same period.
According to Valor Data calculations, the futures contracts of the second position of soybean delivery, the flagship of Brazilian agribusiness, rose 8.91% in the first three months of 2021, accumulating 60.5% appreciation in 12 months and closing the first quarter with an average price ($13.87 per bushel) 54.2% higher than the same period last year. It is the highest average for a first quarter since 2013.
Besides the increased interest of the financial market in the asset, the strong international demand even in times of pandemic - mainly in China, which is expanding its production of chicken meat and rebuilding the pig herd, although this process is still being hampered by the African swine fever - contributes to keep soybeans at high levels. Brazil is the world's leading soybean producer and exporter.
The positive scenario for prices gained even more strength on Tuesday with the release of estimates by the U.S. Department of Agriculture for the area planted in the country in the next harvest (2021/22). The agency projected 35.5 million hectares for soybeans, 5% more than in the current cycle, but below expectations. For corn, 36.9 million hectares are expected, 1% more than in 2020/21 and also less than expected.
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