Here are the simple reasons
1. You can be a vegetarian, a vegan. Your country can be at war or be in a peace time. You can be happily married, single or divorced. Even it could come the end of the world, but you will ever need a cup of coffee for breakfast or for any time you are used to. That will be more needed when you are sick or even more when you are in quarantine because the Corona Virus, that makes everybody want to drink more hot beverages.
2. Currently the experts explain the 20-30%of the total coffee demand as “Coffee consumption out of home” (coffee consumed at offices and the rest of the entertainment industry, including restaurants, hotels and events)
3. That demand is off now, although the office consumption will return immediately when people get back to work.
4. Coffee consumption at the restaurants will be hit badly, but the restaurants will become more aggressive on selling their products to go. Restaurants and coffee shops will be selling their products with innovative ideas bringing carts to the businesses as developing other marketing strategies as associating to platforms as “Uber eats” which is mitigating now the decrease in the regular consumption at the restaurants.
5. About Home coffee consumption, from different sources we are seeing that segment has been doubled. People are stocking food and coffee amidst other supplies and that behavior will continue as the crisis will profound.
6. On the importer side. Traders are aggressive buying coffee, just one weeks ago the market was in backwardation and the ICE stocks and the stock at destiny are being depleted now.
About the supply from different sources and Tango’s posts, I am concluding that the current supply that is affected now by serious logistic problems in Origins can become nothing but worse.
We may be assisting in a real “supply shock” in coffee and that is because COVID 19, which is somewhat curving in Europe, in Origins, developing countries as BRAZIL, Colombia and Peru that thing is already starting. With Global inventories too low now and Funds becoming too short, the situation to the upside could be in one moment very explosive.
Finally just some words to reflect: “..at the end when the world realize that just papers have been issued ( helicopter money and an expansion to the balance sheet to “the infinity), nobody will trust any currency or bond or country. The appetite for food commodities, for funds and people in general will stand.
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