No question future supply will face not only production shortfalls but also logistics from containers being unavailable. This will force industry coverage because of uncertainty. We also all know of the Volcafe report with production problems in key arabica countries, and Robusta impacted as well.
Countering this is the COVID related and still subjectively overanalyzed demand reduction. Arguments set forth are much the same as the ones used for Sugar and Cotton headed south, but addiction in sugar ultimately caused it to rally against expectations.
I donīt underestimate these things, but also submit to you that with the vaccine close at hand, contagion is up and is deadlier during winter months but less deaths considering number of cases--people are less afraid of the virus than they were a year ago. Too, summer months are coming up and these also tend to be of milder symptoms. Crude oil is already heading north to 50 bucks a barrel anticipanting all of this.
So where will prices go ? I believe any downside will be very limited and quickly bought up. Brazilian forward sales given the low upcomning crop will be a selling pressure much diminished from other normal years. Market surge ? Hyper bull market ? probably not as it was in 1985 as there are several dampeners. A sustained and steady rise ? maybe yes. To what level ? Iīd say $1.50 and above is the only way producers will be enticed to forward sell and commit limited quantities, not lower than that. Either way, price direction per my bood is HIGHER.
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