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Re: Arabica and Robusta COT Reports
It's kind of easy for the market to play with coffee under normal circumstances. It takes about 3 years for a new coffee plantation to star producing. Therefore, not easy to give up even if price is below cost. The drought in Brazil back in 2013/14 did make KC prices to soar and stayed high (profitable) for quite sometime. Growers were motivated to expand their plantation. Weather came back to normal, so as productivity but in an expanded area resulting in record high production in Brazil, Colombia, Honduras...it will take time before we see some price recovery. But be assured that at current levels, it's not profitable. In Brazil, growers will borrow money from Co-Ops and Public Banks to cover their expenses. Will hold as much as they can if prices continue to drop. I don't know about other origins. (Will be good to here from other participants). But one thing we must be aware of...a strong US$ has a direct impact on production cost and that will result in less investments on grower's side. It's like stoping a huge Vessel. You turn off the engine, but it keeps on moving. It takes time to come to a complete stop. The question is: has the engine been turned off?