The C Market November 13 2015

C Market Overview

For many many years coffee has been bought and sold in the form of futures contracts on what is called the C market.  Here a company or individual can purchase a contract to accept a certain amount of coffee at a specific time in the future, hence the term 'future'. This type of trading is also known as commodity trading.  It gives market speculators a chance to buy coffee contracts (not actual coffee) at low or high price and then sell the contract later in the form of a short or in a simple sale in order to turn a profit. This system has worked well for a long time. It has its draw backs though. Speculation can increase the level and speed of price fluctuations and the price of green coffee is not always stable.  This can cause problems for coffee roasters and for growers especially, since many of them earn their livings entirely on coffee harvests.  Low prices are bad because people opt out of growing coffee in favor of more profitable and stable crops. This phenomena can lead to even more fluctuation over time.  Younger generations opt out of agriculture all together and instead move into cities in developing countries looking for higher paying work.  All in all there are certain aspects of the C market that may have negative impacts on the coffee industry as a whole going forward.

This is all besides the fact that the coffee available on the C Market is generally of low quality and much of it ends up in the hands of macro-roasters and sold as cheap dark roasted and often canned coffee.

The Alternative

Fortunately there is a new trend emerging in the specialty coffee industry.  High quality coffee is being sold on a fixed price per pound basis and these prices are not tied to the C market whatsoever.  Better quality coffee fetches higher prices among consumers and is therefore worth more to all of the middle men in between (roasters included).  What is most essential though is that with higher quality coffees FARMERS get paid more. Ensuring a reasonable expectation for the value of a coffee crop can mean the world not only to individual farmers but to the industry as a whole. Sustainable farming practices ensured by paying higher prices to farmers is paramount to specialty coffees future. 

Centri is proud to say that nothing we buy is from the C Market and that on average we pay up to three times what the C market price is for our coffees.

http://www.ft.com/intl/cms/s/0/be2baa3c-83a6-11e5-8e80-1574112844fd.html#axzz3rgN50m7t