When coffee made its lows in May, before it put premium in for frost, Brazilian exports were massive and the BRL was trading either side of 4.0. So what's changed from when those lows have been made? The most obvious point would be the BRL below 3.80. While 3.80 may not be a huge difference from 4.0 in the grand scheme of things, if it keeps strengthening, it will sooner or later make a big difference. Beyond that, we got through frost season with some damage - we know it's not a tremendous amount, and while the next crop will still be big, this year's crop is smaller, and estimates are more likely to go down than up in my opinion. Finally, the only thing that's still the same as when we were at the lows, and the big bearish overhand is the Brazilian export program. Brazil will still be able to export a lot of coffee over the next year, but the likely scenario is their exports will lag by 4-6 MM bags from what the market saw this past year. So my question is why would the market go back to a big short position with all that's changed from 2-3 months ago? Is it staking a big bet on the dollar strengthening further?
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