brazil Incumbent President Lula (Luiz Inacio Lula da Silva) was defeated in the second round of the general election on the 25th and won re-election, causing many people’s hopes to fall on his opponent.bolsonaro Investors who won the election to control the national deficit were disappointed. As markets opened on the 26th, both Brazilian stocks and the foreign exchange market fell, falling by more than 10%. The stock exchange also started the circuit breaker mechanism.
A sharp devaluation of the Brazilian real would also encourage the country’s agricultural exports. It is expected that the supply in the global market will increase significantly. Future prices of commodities such as soybean, coffee and sugar fell on the 26th. The Brazilian real fell 12% to 5.6 against the dollar. The iShares MSCI Brazil ETF is expected to decline by about 26%.
Since the international agricultural futures market is priced in US dollars, when the Brazilian real depreciates sharply, the US dollars earned by exporters can be exchanged for more reals, and profits will increase significantly. This will prompt producers to increase supplies to the international market, significantly raising global supply expectations and sending futures prices falling accordingly.
The price of the most actively traded soybean contract on the Chicago Board of Trade fell 1.7% at one point, the lowest since late August. Sugar and coffee futures also declined, with the most actively traded sugar contract falling 3.6% at one point, its biggest decline in more than a month; Arabica coffee bean prices also fell 3.3%; The price of robusta coffee beans fell to its lowest level in two years.
