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Re: Tug of War Coffee Supply Demand
I think a good crop became a large crop in view of the reductions in demand due to Covid so I see your thinking for a delayed response. The fact is that When we speak of a large crop we have to consider the biennial production that follows so when we consider total Brazil consumption and exports of 64 mln bags and production of 68 mln bags this year and a follow up biennial year with no production difficulty of 61 mln we added over the 2 years 1.0 mln bags to Brazil stocks. Using the USDA numbers Brazilís end stocks will be 2.5 mln bags at the end of the 21/22 season. When I compare this number to the opening stocks of the 2015/ 2016 crop year in Brazil which were 17.0 mln bags I see a very tight situation already in the cards without factoring any possible increase in demand or a supply problem.Now we have the possible Covid lockdowns in Europe affecting demand. But on the other hand we have possibly a major supply issue,, if producers believe this to be the case, I think they will stop sales. Supermarket roasters Are enjoying very profitable margins so I believe prices will begin to move sooner than later if the damage viewed by producers is significant.