Coffee gains after the elections in Brazil

One of the most important events during the past weekend was the presidential election in Brazil. The right-wing Bolsonaro defends his stool against the former president Lula da Silva, who has strongly left-wing views. Da Silva won the first round, but he was unable to secure an immediate victory (48.4% against 43.2% for Bolsonaro).

Where did this reaction come from? The market feared da Silva would win in the first round, who is certainly not a candidate favoring the financial markets. If he wants to secure himself a presidential seat, he will have to make some promises to the business sector. On the other hand, the market still hopes that Bolsonaro will be able to win these elections, as he is, among others, an advocate of privatization. It is worth remembering, however, that Bolsonaro is quite a controversial politician and corruption scandals occur very often in Brazil.

Despite the recent election results, the BRL is very strong against the dollar, which helps coffee. Due to the strong BRL, producers prefer to keep coffee stocks in their country.

Source: xStation5