Commodities and Emerging Markets

Part of the Commodities For Dummies Cheat Sheet

One of the driving forces behind the dynamic commodities markets are emerging markets, both from the demand side and also in terms of supply. Keep an eye on Brazil and China, two countries that tend to move markets.

Brazil: A powerhouse in the commodities markets, Brazil has been blessed with an abundance of natural resources. It's one of the top agricultural countries in the world, with leading positions in coffee, cocoa, corn, wheat, eucalyptus, and sugar cane production. In energy, it has large reserves of crude oil in the offshore basins off the Atlantic Ocean. It also has sizable mining reserves with abundant iron ore resources. Since Brazil holds such a dominant position in the supply and production of key commodities, it's important to monitor this country very closely.
China: China has been the miracle story of the beginning of the 21st century. Many analysts compare its rise to the emergence of the United States as an economic powerhouse in the late 19th and early 20th centuries. Home to more than 1.3 billion citizens, China is a truly gigantic market. In many instances, it has been the main driving force behind demand increases for important commodities, including steel, copper, wheat, and crude oil. As the Chinese economy continues to expand at eye-popping rates (averaging 9 percent annually during the first decade of the 21st century), expect it to push demand for commodities at even more important levels.