by Joe Marrocco, Café Imports
Navigating a Volatile Market
When buying green coffee, the supply chain can seem to be more of a labyrinth than a pathway. Navigating the ever-volatile market in order to find coffees that meet both your quality standards and budgetary needs, while also maintaining a green inventory or supply over the long haul, can seem more like the job of a sorcerer than a sourcer. I am asked about the market on a daily basis, typically many times a day. For some, the market is a subject that evokes intrigue, and can even pique a latent gambling curiosity. For others, it is a subject that carries with it fear, confusion, and in the worst cases, regret. As I reread what I have just written, I realize that so much of the time, market positions are managed through an emotional haze.
The commodities market is actually kind of a beautiful thing. If you don’t believe me, read the article written by Ric Rhinehart in 2014 Issue No. 1 of The Chronicle. Ric says this of the original concept of the market: “Put simply, sellers can be guaranteed a selling price for future crops, and buyers can be guaranteed a known cost for future deliveries. This allows both ends of the supply chain to manage their risk and to focus on their core business.”
This doesn’t mean that the market is the perfect system, or that we shouldn’t be working toward something better. But today’s green-coffee-buying reality includes the C market. Not only should you acknowledge this fact, but your company should also understand it and use it as a tool.
Managing Risks in Green Coffee Buying
The sound of the phrase “managing risk” evokes all of the emotions discussed above. However, this does not have to be the case. To manage risk, one must understand the risks they are facing, and understand the tools that they have to work with.