Opportunities in the commodities market: why investors are eyeing Brazil

The global commodities market moved approximately US$ 3.6 trillion in 2022, representing 15% of the world GDP. These real assets—ranging from iron ore to grains—have become increasingly attractive for those seeking to diversify portfolios and hedge against inflation. And Brazil? Leading as one of the largest global suppliers, especially in agricultural and mineral products that drive the global economy.

The strategic role of Brazil in global commodities trade

When we talk about major commodity producers, Brazil is impossible to ignore. The country positions itself as a key exporter in several categories:

Soybeans: Second-largest global producer, generating US$ 60.95 billion in exports in 2022. The grain supplies everything from animal feed to the biofuel sector.

Iron Ore: An essential commodity for global steelmaking, Brazilian sales reached US$ 29.04 billion in the same period.

Oil: With expanding pre-salt exploration, Brazil shipped US$ 27.40 billion in crude oil in 2022.

Sugar and Meats: The country remains the largest global exporter of sugar (US$ 9.5 billion) and a strong supplier of beef and chicken (US$ 11.8 billion).

This diversification positions Brazil favorably within global supply chains.

Why invest in commodities now?

Commodities feature unique characteristics that differentiate them from other investments:

Decorrelation from stocks and bonds: Their price movements do not follow patterns identical to traditional financial markets, offering true diversification.

Inflation hedge: Historically, commodities tend to track inflationary periods, maintaining investors’ purchasing power.

Returns in bull cycles: Between 2000 and 2008, the commodities market experienced significant gains, especially in energy and metals.

Assets with intrinsic value: Unlike pure financial instruments, commodities have real utility in the economy—they are raw materials the world needs.

The main commodity segments and their numbers

The market is divided into well-defined categories. Oil leads with 12% of total traded (US$ 1.9 trillion in 2022). Following:

• Grains and oilseeds: US$ 330 billion
• Mineral coal: US$ 220 billion
• Natural gas: US$ 210 billion
• Agricultural commodities (coffee, cocoa, sugar): US$ 270 billion
• Precious metals (gold, silver): US$ 180 billion

These figures reflect the market’s magnitude and entry opportunities across different segments.

How to start investing in commodities

For those wishing to enter this market, the process follows well-defined steps:

1. Choose a regulated broker: Open an account on a trusted platform that offers access to commodity futures contracts.

2. Analyze the market: Study price trends, geopolitical risks, and the use of each commodity before investing.

3. Define your strategy: Short-term operations seek profits from daily fluctuations; long-term strategies leverage structural trends.

4. Invest in futures contracts: This is the main instrument, allowing leverage and both long and short positions.

5. Constantly monitor: Track charts, technical indicators, and news impacting the prices of the commodities you are exposed to.

Risks you need to know

Every opportunity comes with challenges. Commodities exhibit significant volatility—prices can experience sharp fluctuations in the short term, influenced by weather, geopolitics, and supply and demand factors.

Geopolitical factors can disrupt production or exports. Storage costs impact products like oil. The leverage offered in futures contracts amplifies both gains and losses.

Strategies to reduce risks

Diversification: Don’t put everything into a single commodity. Prices do not move perfectly correlated.

Stop loss: Set automatic loss limits to avoid large losses.

Hedging: Use offsetting futures contracts or options to protect your positions in adverse scenarios.

Active monitoring: Market trends change rapidly. Stay informed about factors affecting each commodity.

Is it worth investing in commodities in 2024?

It all depends on your investor profile and objectives. Commodities offer real inflation protection and genuine diversification—attributes increasingly valued in uncertain economic scenarios.

The major trading centers (Chicago, London, Shanghai, Dalian) record growing volumes, signaling institutional confidence.

If you seek exposure without directly buying and selling contracts, index funds and sector companies are viable alternatives. In any case, understanding the dynamics of the commodities market is essential before allocating capital.

The market is here, the numbers are real, and Brazil remains a key piece on this global chessboard. It’s up to you to decide if now is the right time for your portfolio.