{"id":642,"date":"2019-05-21T10:24:47","date_gmt":"2019-05-21T13:24:47","guid":{"rendered":"https:\/\/comexim.com.br\/?p=642"},"modified":"2019-05-21T10:24:49","modified_gmt":"2019-05-21T13:24:49","slug":"weak-brl-reminds-us-of-2001","status":"publish","type":"post","link":"https:\/\/comexim.com.br\/en\/weak-brl-reminds-us-of-2001\/","title":{"rendered":"Weak BRL reminds US of 2001"},"content":{"rendered":"\n
<\/i><\/span>Back<\/span><\/a><\/div>\n\n\n\n\n

WEAK BRL REMINDS US OF 2001<\/a><\/h2>\n\n\n\n

Equities\nacross the globe paused the meltdown seen on Monday, last week, as it seems\nlike the markets are looking to navigate through a new reality of tariffs in an\nocean of liquidity that eventually could ease even further if something bad\narises again.<\/p>\n\n\n\n

Maybe\na lack of alternatives could be the justification for blind-buying indices that\nreplicate the exposure on stocks, but the fact that the Dollar Index\nstrengthened hints that investors see the US suffering less than everyone else.<\/p>\n\n\n\n

Commodities\nbounced nicely also from the sell-off with grains and energy being the lead\ngainers, while silver, gold and sugar were the ones losing ground.<\/p>\n\n\n\n

Coffee\nin five days is virtually at the same level, with the market trading from 92.55\nand 88.45, in New York and 1410 and 1292, in London.<\/p>\n\n\n\n

Fundamental Focus<\/h4>\n\n\n\n

Jair\nBolsonaro’s ability to put himself in unnecessary discussions and confusions \u2013\nrecently attacking the student class in Brazil (one of the main forces behind\nimpeachments that Brazil had had quite a few) \u2013 is depleting his\npolitical-capital and places in check his governability, including the key\npension-fund reform that is dragging the economy into a hole.<\/p>\n\n\n\n

The\nlevel of uncertainty can get worse as some of the president-supporters are\ncalling for the population to go to the streets to demonstrate his strength \u2013\nbut if the students do not show up, the unemployed people have no money to hop\non transportation and the employed ones have to work, imagine how dangerous it\ncan be if the turnout is meagre\u2026<\/p>\n\n\n\n

Anyway,\nBrazil remains the land of the future \u2013 some jocularly say it will always be \u2013\ntherefore the market starts to price negatively the risks of the country with\nthe BRL shooting to 4.1211 \u2013 still behind R$ 4.2133 from August 30th<\/sup>\nlast year and R$ 4.2478 seen in September 24th<\/sup>, 2015.<\/p>\n\n\n\n

Looking\nat coffee the fear is how a shaky background could create again the shivering\nscenario of 2001\/2002, when the Real devalued steeply, from R$ 2 to R$ 4 in\nfront of the, then, largest Brazilian crop ever (55 mln bags?), leading New\nYork and London to their historical lows, US$ 41.50 cents per pound and US$ 345\nper ton, respectively.<\/p>\n\n\n\n

No,\nI do not think that we will see the markets at such levels \u2013 if I had to pick\nnumbers I would say the bottom is probably at US$ 85 cents, maybe a little\nlower, and US$ 1100\/1200 per ton for robusta, however if the Real enters in a\nspiral devaluation these levels need to be revised.<\/p>\n\n\n\n

The\nflow of coffee improved in the main origin and with the harvest advancing\nthere, as well as in Colombia and Peru, more selling will be hitting the board\nin the next months \u2013 which could encourage funds to stay put on their position.<\/p>\n\n\n\n

Today\u2019s\nperformance was not bad, especially with London rallying, providing support for\nNY, besides the BRL weakness.<\/p>\n\n\n\n

Rains\nin the Brazilian coffee belt were plentiful recently and if it continues may\nhurt quality, maybe another reason for one not to be aggressive on the sell\nside.<\/p>\n\n\n\n

Strong\ndifferentials are forcing those who need coffee to cover their needs, after\nwaiting for a window opportunity that hasn\u2019t happened for a long time.<\/p>\n\n\n\n

The\nColombian congress approved a contribution of US$ 6 cents per pound on the\ncountry’s coffee exports and raised the moisture requirements for imports of\nthe product, measures that try to alleviate the crisis suffered by its producers.<\/p>\n\n\n\n

On\nits second estimate for the 2019\/2020 Brazil crop CONAB sees total production\nat 50.92 million bags, of which 36.98 million arabica and 13.9 million conilon\n\u2013 many market participants expect the conilon number to be between 18 and 20\nmillion bags.<\/p>\n\n\n\n

Brazilian\nCentral Bank is offering USD through swap deals providing liquidity for those\nexiting the long position on the greenback, which gives a bit of time for\nBolsonaro to, eventually, get his govern together. If the BRL is able to\nrecover, NY shall move up. Another bet can be on the winter in Brazil, but less\nand less players have the experience of going through a frost as the last\noccurrence was 22 years ago.<\/p>\n\n\n\n

Technical\nFocus<\/h4>\n\n\n\n

ICE\nJuly contract must respect 87.60 to avoid a test of the 84.00 cent level that\nwe last saw on November 15th<\/sup>, 2004 \u2013 on that year the low was 66.00\non January 5th<\/sup>. A closing above 92.25 may trigger some short\ncovering. London has first support at 1267 and resistance at 1407.<\/p>\n\n\n\n

Wishing\nyou a nice week,<\/p>\n\n\n\n

Best regards,<\/p>\n\n\n\n

Rodrigo Costa<\/em><\/strong><\/p>\n\n\n\n

Skype:\nrodrigoccosta10<\/p>\n\n\n\n

WhatsApp:\n+1 646 468 7091<\/p>\n","protected":false},"excerpt":{"rendered":"

WEAK BRL REMINDS US OF 2001 Equities across the globe paused the meltdown seen on Monday, last week, as it seems like the markets are looking [\u2026]<\/span><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[16],"tags":[],"class_list":["post-642","post","type-post","status-publish","format-standard","hentry","category-commentary"],"_links":{"self":[{"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/posts\/642","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/comments?post=642"}],"version-history":[{"count":1,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/posts\/642\/revisions"}],"predecessor-version":[{"id":644,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/posts\/642\/revisions\/644"}],"wp:attachment":[{"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/media?parent=642"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/categories?post=642"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/tags?post=642"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}