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Posted by M
on October 11, 2020, 9:11 pm
I am now confident in stating that the coffee crop will be severely reduced in the coming year. MajCoffee of course ran the alarm bell earlier. As is sometimes said, trust but verify! After a through analysis of the conditions that have existed since the flowering rains with no follow up rains expected before at the earliest late this week in combination with the high temperatures that the coffee crop suffered through the last 2 weeks any rains at that point will be meaningless.Yes it will rain but the damage has been done , the flowers that set will be sharply reduced. Anything less than normal rains going forward will only add to additional losses. To put this year in context, the precipitation and temperature profile is worse than 1985 and 2002. Combined with the biennial we should see a massive reduction in production. If ever there was a year for a bull market this is it. FYI all coffee droughts that reduce production occur in September and October and are always followed by regular rains which donít aleve ever the damage that has already occurred. If you think droughts occur in January, you will wait a very long time to experience a replay of the unique drought that occurred in January 2014! After 6 years of bearish price action it is impossible to know how and on what timeline the market will digest these reductions. That we will have to see but the reductions are very real!