Commodities broker says Brazil is key to prices

30 September 1998

Commodities broker says Brazil is key to prices

GNI, the international commodities broker, says Brazils economic future is the key factor in the fortunes of world commodity prices.

In its latest Commodity Perspectives report, GNI says the countrys measures to tackle its trade deficit and the threat of a devaluation will have a big impact on commodity producers and prices.

Brazil is the worlds biggest grower of coffee, but also produces and exports substantial amounts of other commodities such as sugar, soyabeans, cocoa and coarse grains.

The report reckons that a devaluation would help the long-term expansion of these sectors, but would do little to boost volume in the short term. It would probably tend to weaken international prices.

On coffee, GNI said the US market had stalled, largely because of uncertainty over Brazils 1999-2000 crop. A lack of rain in the crucial area of Mina Gerais would make the global market positive, the broker says.

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