What is the C-Market?

It may surprise you to learn that coffee is the second most traded commodity in the world, after oil. The commodities market, or C-Market, price for coffee is based on two major factors:

1. The production volume of the three largest coffee producing countries, Brazil, Colombia, and Vietnam. A high volume harvest from these countries means there will be a lot of coffee on the market and the price will trend downward. A frost in Brazil, however, can mean coffee production will be lower and the price will trend upward.
2. Large corporations and banks trading coffee futures in order to secure low prices over time, sometimes extending years in advance. The more coffee futures are purchased at a low price, the longer that lower price will be the daily C-market norm.

These factors, along with general supply chain costs, mean that the price of green coffee can fluctuate daily, although it rarely goes up or down by more than 10 cents in a day. For the majority of the time that coffee has been traded this way, the C-market price has been lower or equal to the cost of coffee production in many countries, meaning that coffee producers get locked in an endless cycle of borrowing money from large banks to finance their coffee farms, then paying back the banks at the end of the season with little or no profit to keep for themselves. This has tended to consolidate coffee lands into larger and larger farms, which can drive down production costs through volume, often at the cost of quality. Of course, the C-Market price does not reflect coffee quality at all, only coffee availability and the promise of futures contracts.

Enter companies like Red Rooster, who are focused on paying a fair premium to coffee producers while seeking out the highest quality coffee in the world. This means paying much higher prices per pound than the C-market price and building relationships with coffee producers in order to guarantee year over year purchases. Through paying high premiums for high quality coffee to the same producers year over year, we join the farmer in taking control of their product, relieving dependence on large banks, and creating a direct relationship between quality and price. 

If you'd like more information, have a look at live C-Market price.