this coffee market. . .
Last week I was able to participate in the SCAA Symposium in Houston Texas. In my job as a green buyer for Dallis Bros, managing our risk and quality are priorities number one and number one. Really. Both are related.
The global perspective shown in the Symposium was really refreshing to hear. The attitude seemed to be, “we are all in this together”. One of the positives from this market is that all of us buyers are dealing with the same NYBOT_KC ticker. I want to share a bit of what I understand as of now:
1) The paradigm shift that recently happened (maybe 9 months ago) was the fundamental driver of the coffee C market switching from Supply driven to Demand driven. Demand is nearly impossible to quantify and “visible coffee stocks are at the lowest recorded levels”.
2) Emerging markets: Brazil, China and India are consuming much more coffee than they did before. Brazil’s consumption (from the graphs I’ve seen) is increasing almost 1million bags (60kg) a year.
3) In general the demand has gone up and supply has also increased. But consumers are demanding more and more quality coffee (Specialty Grade). The Specialty supply hasn’t kept up with the increased demand.
4) Foreign Currency rates are pushing the market around, especially as the dollar has weakened. For example, today the market fell about 12 points over the period of about 30 minutes. . . Word on the street is a weak report on the Brazilian Real caused a sell-off.
It is chaotic. The coffee market has always been chaotic. I hope this at least explains a bit of the chaos. There is plenty more to come.