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Opinion
David Fickling

Brace Yourself. Brazil Is About to Rock Markets

President Jair Bolsonaro’s remarkable political reversal on welfare will be felt in soybeans, beef, chicken and even coffee.

Shaking up markets.

Shaking up markets.

Photographer: Patricia Monteiro/Bloomberg
Corrected

You might think the most important factors driving commodity markets right now are the speed at which the U.S. Federal Reserve unwinds stimulus; the state of China’s real estate industry; or geopolitical jostling within OPEC. Don’t rule out the significance of Brazilian welfare payments.

Brazil’s currency, the real, has been trading around record lows in recent months, thanks largely to the President Jair Bolsonaro’s efforts to tear up a fiscal straightjacket and introduce an anti-poverty program ahead of elections in 2022. Laws that will allow the passage of the measures — a reboot of the Bolsa Familia cash welfare payment introduced by his predecessor Luiz Inacio Lula da Silva that Bolsonaro wants to raise to around 400 reais ($71) a month — have already cleared the lower house of congress and are now working their way through the Senate.