In Brazil, Lula's re-election weighs on the price of agricultural raw materials

Chronicle of raw materials In Brazil, Lula's re-election weighs on the price of agricultural raw materials Published on: 10/28/2026 - 00:40

Listen - 02:11 The re-election of Lula da Silva as president of Brazil had an immediate effect on commodity markets: the main Brazilian agricultural products – sugar, coffee, but also soya – saw their prices fall. This drop is mainly explained by the fall of the real, the national currency, which lost more than 10% upon the announcement of the outgoing president's victory.

Brazil's competitiveness then becomes better on the markets, which resulted on Monday October 26 in a price of sugar falling by 5%, while that of coffee fell by 4% and that of soya by a little more than 2%. Attractive prices which could cause an acceleration in Brazilian sales.

One country could benefit from it: China. Opportunity purchases are a principle: if there is a way to import into markets at lower prices, to fill its stocks, the Middle Kingdom does not hesitate, even if the firing window is short, and the country only orders one boat.

Beijing had suggested that soy purchases could decrease this year, but this positioning could change to take advantage of a windfall effect. More purchases from Brazil would likely mean fewer orders from the United States. Over the first nine months of the year, Brazil has already supplied 80% of Chinese soybean imports, despite the agreement between Beijing and Washington on the subject.

For Brazilian prices to maintain their new attractiveness, the decline in the real would need to persist over time. On Monday, October 26, the markets, according to some experts, overreacted because they were surprised by Lula's victory. This does not, however, express a generalized loss of confidence.

“It is more of a warning shot from financial operators than a groundswell,” notes Olivier Antoine, director of ORAE Geopolitics, who recalls that during Lula's last mandate, there was no drop in the currency linked to his economic management of the country. The re-elected president himself has no interest in panicking the markets, "because if his agricultural exports are more competitive when the real falls, the country is penalized for its purchases of inputs of which it is a major importer", notes one of our interlocutors.

The price of Brazilian agricultural raw materials today appears more dependent on climatic hazards than on a long-term depreciation of the real. The country is in fact living under the threat of El Niño which could lead to a historic drought in the Amazon and floods in the south of the country.

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Machine-translated from French