Trade information for coffee traders: the essentials.

• Author: Dubois, C.P.R.

TRADE INFORMATION FOR COFFEE TRADERS: THE ESSENTIALS

To operate successfully on the commodity exchanges and in the physical trade, coffee producers and exporters must obtain accurate, up-to-date market information. Such information is required on a continuous basis from various sources around the world. It should be accessible in a form that can be analyzed and acted upon rapidly, in order to maximize trading operations. Some of this market information, for instance on price changes, can be obtained quickly, almost as soon as new developments occur, via telephone, fax and the wire services. Other types of information take longer to gather and are transmitted more slowly, for example through daily, weekly or monthly publications or information services. Whereas news services are designed to provide basic day-to-day or even minute-by-minute trading information, the less frequent services are often better suited for more fundamental analyses of a coffee trading situation or problem. Coffee exporters in developing countries should be familiar with the different information sources available and the ways in which each type can be used most effectively.

Rapid communications

The most rapid means of transmitting information from a commodity exchange or a commodity trading centre are by telephone, telex and fax. Such communication facilities are commonly used in commodity exchanges. Suppliers following the market can have direct contact with the floor of the exchange by telephoning floor traders or brokers. In some situations, however, it may not be feasible or even necessary to use the telephone. For instance, the time difference between the trading location and the exporter may be too great for a direct telephone conversation to be held during normal working hours. An alternative is to use telex, which is a rapid, reliable way to transmit and receive written communications worldwide. Telex networks operate nonstop every day in most places. Sending a message by telex is usually less expensive than using the telephone. Even though the use of outgoing telex lines may be limited to the period covered by regular office hours, incoming messages can be received during off hours on the telex terminal.

Telefax is rapidly becoming one of the major means of international communication. In the coffee trade, it is increasingly being used for exchanging coffee contracts. In many countries the facsimile copies of the contract are considered as legal documents that can serve as the basis for concluding sales transactions.

Services on a daily basis

Numerous information services are available on a daily basis. They provide details on current and recent prices and other changes in the market. News services obtain information from sources all over the world. The sources may include all of the persons or organizations involved in the coffee trade, from the supplier to the final consumer of coffee, as well as the related servicing organizations, such as banks and shipping lines. Some of the principal information services are mentioned below. In general the major services of this type tend to be based in the main coffee-trading centres such as London and New York.

For coffee traders, the most important information to be obtained is the market closing prices for coffee. The Financial Times is one of the most comprehensive sources of...