Tuesday, August 20, 2013

Weakness in the real hurting sugar and coffee

The last few sessions have seen continued weakness in the Brazilian currency, aiding the sell off in sugar and coffee.

Sugar has been hardest hit, dropping well below the 17.00 cents/pound mark.

That comes on the back of the latest COT report showing that managed money added a massive 40,000 new net long positions (short covering) over the previous reporting period.

For me the interesting one is coffee. I have my eye on a bearish position in an new crop/old crop spread and the currency weakness, if it continues, will help push prices down further. Details to come...

When the real weakens versus the USD, Brazilian exporter's get more value and are encouraged to sell, depressing commodities that trade in USD.

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