31 Jan Career Spotlight: Coffee Trader
Perhaps no other “commodity” captures the attention of consumers quite like coffee. A coffee trader might argue that coffee isn’t a commodity at all, rather a product that should be celebrated for its many varieties and subtle differences. Like wine experts, coffee industry veterans are steeped in the knowledge of what makes great coffee. They understand that the flavors and aromas steaming forth from your cup each morning are rooted in the soil.
It takes logistical prowess to get a coffee bean from the field to the cup. The vast space between the farmer and the barista is where coffee traders make their living. From sourcing beans to importing shipping containers to sales, coffee traders make sure the java keeps flowing.
GROWN IN THE TROPICS, CONSUMED EVERYWHERE
Coffee is grown in an area roughly bounded by the Tropic of Cancer and Tropic of Capricorn, known as “The Bean Belt”. This includes Mexico, South and Central America, Africa, parts of Asia, and Hawaii. The fruit of the coffee tree, known as the cherry, is picked from trees to begin the process.
The Specialty Coffee Association of America estimates the retail value of the U.S. coffee market to be $48 billion. That figure represents a lot of jobs across the entire supply chain. Coffee is planted, harvested, processed, sorted, dried, milled, exported, tested, roasted, and ground all before it is brewed. Aside from the staggering amount of labor required to squeeze a world-renowned drink out of a tiny bean, the wheels of the coffee machine require a little grease from people who know how to move it from place to place.
“We import coffee all around the country, from New Jersey to Miami to Oakland to Seattle,” says J. Morales with Serengeti Trading in Dripping Springs, Texas. Morales is a coffee trader, facilitating the flow of green coffee between suppliers and roasters. “We connect the origin country to the roaster,” he says. But like coffee itself, the process of transporting coffee around the globe is more complex than it may seem. Government regulations, trade association certifications, and consumer demand for transparency all weigh into a trader’s ability to effectively buy and sell the beans.
Morales must keep a continuously-open dialog with his roasting customers to understand what kind of beans and flavor profiles they need. He then enters the market and works with his suppliers to fill those needs.
FILTERING THROUGH THE CHALLENGES
Lately, says Morales, coffee roasters have been becoming more involved in the origination process. “They [roasters] don’t want a middle man . . . but they still come to us because we have those channels already paved to get the containers in quickly and safely and without tons of fees and tests and all that.” That competitive logistical advantage has allowed Serengeti to remain relevant as their customers take more of an interest in how their raw material is sourced.
Importing coffee from multiple international sources requires flexibility and patience. Morales describes the U.S. business regulatory system as a well-oiled machine, and he points out that origin countries often have different rules that must be taken into consideration.
Often, coffee buyers are dealing with small family farms in developing countries. Morales believes that the specialty coffee industry has taken on a commitment to sustainability and the fair treatment of growers. “I definitely think [we’re] on the forefront of that. When you have something that’s grown only in developing countries, where the opportunity for exploitation is very high, especially when the U.S. is one of the biggest buyers of that product, I think it behooves us . . . to make sure we’re getting that responsibly,” he says.
COFFEE IS FOR CLOSERS (WITH A GOOD ATTITUDE)
Morales thinks good coffee traders must be willing to take on a little risk occasionally. They must walk the fine line of managing a position without becoming overexposed to a fluid market. “You can’t be too rigid, you know? You’ve got to adapt.”
The high stress nature of trading is why he also points to having a good attitude as a key requirement to being successful in the business. It’s the nature of the beast for any commodity trader, but especially for those dealing with the nuanced variables of a product like coffee.
The benefits? Morales cites people and travel as the biggest perks of his job. He and his colleagues take trips to origin countries and attend several trade shows across the country. “Coffee is the second most traded commodity next to oil, but when you go to these conferences and see coffee industry people, it’s like an old friend.” He likens Serengeti Trading to the industry as a whole: lean and mean and able to get things done.
Morales sees moving from logistics into trading as the ideal path for kicking off a career in coffee trading. He had a background in sales before starting with Serengeti in an entry-level position. Having a solid understanding of how coffee moves through each stage of the process helps him work through issues with his current clients. “Because I know everything comprehensively from A to Z, it helps me explain problems to customers,” he says.
A love for coffee, commitment to sustainability, and the desire to learn the intricacies of physical commodity trading are all strong building blocks towards a career in buying and selling coffee. But it also takes a willingness to sometimes fail, excellent interpersonal skills, and an appreciation for international travel. Speaking multiple languages such as Portuguese, Spanish, or Vietnamese could also provide a valuable leg up.
Much like in feed sales, coffee trading requires the ability to build lasting, meaningful relationships with customers and be available to address their concerns. A foundation in economics is also key to deciphering supply and demand and identifying arbitrage opportunities, especially because coffee is traded globally. As with many agricultural commodities, futures contracts are traded on coffee, so a background in hedging and risk management is an asset. Truck, rail and ocean container ships are all used to move coffee beans. An effective trader must know the details of each mode of transportation and how to utilize each correctly.
Finally, the ability to brew the perfect cup of coffee is not a prerequisite to becoming a coffee trader, but it might just imbue a sense of appreciation among your co-workers. For more information about coffee, visit the websites listed here:
Specialty Coffee Association of America
Intercontinental Exchange (ICE)
If you are interested in pursuing a career in the coffee industry, click this link and send us your resume. If you have any questions about this article or any of AgGrad’s career profiles, email Logan West at logan@aggrad.com. We would love to hear from you.
