Brazil is in an inflection point, as its Central Bank (BCB) is expected to reduce interest rates for the 1st time after 2 years of hikes, while a tax reform is close to being approved. This could mean a revaluation for the Brazilian Real which in turn could have a major impact on coffee. In our view, the long-term net effect of these changes leans bearish for the coffee market and would offset bullish impact from the USD.
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