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Coffee Testing ST Resistance, BRL Risk Premium Remains Elevated

  • Coffee: front month futures is currently testing its 155 resistance, which represents January 2017 high; a break above that level would open the door for a move up to 176 (November 2016 highs). Supports to watch on the downside stand at 150, followed by 137.40.
  • As a reminder, even though Brazil accounts for 15.1% of total coffee exports (followed by Columbia 8.7%), it still represents 'only' 2% of total Brazil exports (estimated at 230bn annually USD pre Covid).
  • Exports are led by soybeans, crude petroleum and iron ore, all accounting for approximately 10% (each) of total exports.
  • Risk premium on BRL remains elevated as the rising economic and political uncertainty has been offsetting the strong momentum in commodities.

Source: Bloomberg/MNI

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