Antonio Rosset, Leeco Trading’s Commercial Director, shares his insight into the direction of the international trading market.
“We are seeing strong production levels from China as businesses reopen and return to normal operations. This puts downward pressure on global metals and chemicals prices, given immediate demand is low. However, businesses are reopening in Latin and South Americas, so we expect demand and prices to increase in the short-term. This is an excellent time to buy and take advantage of low prices while they last.”
There were endless numbers of important articles this week, but we collected our top four. For more timely news and insights, follow Leeco Trading on LinkedIn or Twitter.
The New York Times reported that Mexico’s Treasury predicted that the country’s economy will contract by as much as 3.9% in 2020 due to the COVID-19 pandemic, but private analysts say that number is low. Mexico will face two major challenges: an economic contraction in the United States, its largest trading partner, and oil prices that have fallen to about $10.60 per barrel for Mexican export crude.
A recent article from Bloomberg took a closer look at Peru’s response to the coronavirus’ economic impact. The article stated that while Latin America’s two largest economies, Brazil and Mexico, debate pursuing large stimulus packages that could erode fiscal targets, Peru is going big with a stimulus package valued at 12% of the country’s GDP. Normally, such a move would unnerve investors, but trading so far shows they approve of it.
S&P Global Platts reported that Brazilian soybean exports in 2019-20 crop year (September-August) could be unaffected by the coronavirus pandemic, as the world’s largest oilseed supplier has already sold 75% of the crop, according to market sources, with China the top buyer. Depreciating currency value in Brazil makes it attractive to international buyers and benefits farmers.
While COVID-19 will have a serious detrimental impact on the economies of Latin America, the oil price war is a second economic blow for the region, reported Columbia University’s Earth Institute. Latin America will face a year of lower economic growth and weaker public finances. But the real problem is that the region has limited capacity to offset the external shocks with monetary and fiscal policies, darkening the outlook further.