How Bad is it in Commodities? Bad…

To get an idea of how bad things are in the natural resource space, look no further than Brazil…
 
More than a year ago, we urged readers to stay cautious toward the commodity sector. Back then, commodities had enjoyed a huge rally… But as we noted, Brazilian stocks were “breaking down” to new lows.
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Brazil is one of the ultimate destinations for investors who want exposure to commodities. Its state-operated oil company Petrobras has found a series of giant offshore oilfields in the past decade. Brazil is a major producer of agricultural commodities like soybeans, cattle, corn, coffee, and sugar. It’s a major producer of iron ore. Much of this production heads to China, Brazil’s largest trading partner.
 
As you can see in the two-year chart of the Brazil investment fund, our warning was well-timed. Brazil has been hammered since its 2011 peak. The rally that began early this year has reversed with a huge correction… The fund now sits at a 52-week low. China is slowing… which has hammered commodity-producer Brazil.


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