Brazil led fertilizer imports worldwide in 2021, totaling 15,165 million dollars, a year-on-year increase of 88.9 percent.
If that same amount is compared to 2019, the increase in value is 65.8 percent.
On this, BlackRock Latin American Investment Trust considered that the Latin American region has a low exposure to Russia and positive correlations in general with higher prices of raw materials.
But it did make one caveat: “The only caveat is that Brazil imports 85% of its fertilizer needs and a fifth of that comes from Russia. The Brazilian government is already busy with a long-term plan to produce more local fertilizer.”
BlackRock Latin American Investment Trust aims to secure long-term capital growth and attractive total return primarily through investment in securities listed in Latin America.
Of the total imports of fertilizers from Brazil in the past year, 23.3% originated in Russia. Other prominent suppliers were China, Morocco, Canada, the United States and Qatar.
After a challenging year in 2021, particularly for Brazil, the region is off to a very strong start to 2022.
As global economies have reopened after the Covid-19 pandemic, significant amounts of fiscal stimulus flooding into the economy (particularly in the United States) have pushed commodity prices higher and higher.
This was later exacerbated by the recent devastating events in Ukraine, which severely restricted the supply of key commodities and pushed prices even higher.
Latin America is rich in many key resources such as lithium, oil, iron ore, copper, and important food products such as wheat and soybeans.
Some of the longest lasting and lowest cost reserves are in Brazil, Chile and Peru. Almost 75% of Latin America’s exports are related to basic products (compared to, for example, 25% in Asia).
According to BlackRock Latin American Investment Trust, aggressive interest rate increases in several Latin American countries to control inflation in 2021 have dramatically widened the interest rate differential with the United States and this should benefit Latin American currencies (which are already are among the best performers in the world in the first quarter of 2022).
Also the currency and stock markets should benefit from the fact that the region is physically and politically remote from the epicenter of the conflict in Europe.