Petroleum, the commodities era and Brazilian agriculture

Abstract

After a historical commodity price increase, there are signs of a falling period. However, the decrease in prices is not homogenous among energy, mineral and agricultural commodities. While energy commodities had the biggest reduction in prices, and this might contribute to economic growth, mineral commodities did not show a significant reduction in prices. Agricultural commodities will be positively affected by economic growth and by energy costs decrease; nevertheless agricultural costs of production will not decrease due to fertilizer and other inputs (machinery and chemicals) price rigidity. Given this scenario, it is not expected a significant commodity price decrease, when compared to other types of commodities, unless disruptive technologies become available. This is an opportunity for Brazilian investments in technology, especially in fertilizers and sanitary and phytosanitary measurements. Moreover, Brazil should increase and diversify its production through increasing the period of land use, particularly in the Cerrados area, and through exploring aquiculture and bioenergy.