I've been thinking about a few points connected with the market, and don't have any easy answers.
1. Firstly - Big picture - at what level are prices 'too low'? There must be a point where buyers want to step in and buy large volumes of coffee. On the other side there must be a point where sellers no longer sell?
I know the Real has devalued, helping the Brazilian producers, but even so they must think prices are very low?
To use an analogy, the oil market is quite transparent in what are considered low and high prices and it's clear where buyers want to step in, and sellers want to stop selling.
2. Secondly - Why don't producers think 'if I keep producing lots of coffee I'll just push the price even lower' and try to limit their output (a little bit, not all of course). Particularly given the large volumes of stocks that exist - you are just adding more coffee to the pile in the warehouse.
3. If producers know that funds will follow momentum, why don't they bid the price up a bit so that the funds trend it higher, before selling. That's what I would do. Or why doesn't the ICO work on a producing a 'living wage price' which seems to have worked well in cocoa so far.
Simply put, I don't seem to be able to understand the fundamentals of market behaviour (I understand the fundamentals of large amounts of supply and less demand) of the participants, and how this relates to the price.
Any insights/discussion is gratefully received.
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