On October 8, 1939, at Crosley Field in Cincinnati, a fellow named DiMaggio put on a display of footwork that is still talked about. In the tenth inning of that fourth game of the World Series, Joe DiMaggio slid safely home to win the game and The Series for New York. The event took the sting away from the headlines about Russia and Germany finishing off Poland, and focused the country’s attention on what was really important to Americans that fall: baseball.
I saw The Yankee Clipper play once. My father took me to a game at The Stadium. There is only one “Stadium” spelled with a capital letter in New York; then as now it meant a ball field in the Bronx. It was 1951, I was five, and Jolting’ Joe was playing in his last season. Pop said I would always remember that I saw Mr. DiMaggio play, and he was right.
The man who introduced America to the Mr. Coffee machine was a phenomenal base runner, as his 1939 World Series feat illustrates. And I thought about him and that slide as I have been watching the market slide safely home this past month.
I, like every other small roaster, was on my feet with anxiety as the “C” passed $1.75 and looked like it was heading toward $2.00 as we rounded November. Then everything changed, and in just a few weeks the market slid into the 130’s. I wrote about the run-up in Do What You Can with What You Have in December 2016 CoffeeTalk, p.22, and now within a short time after penning that piece the market has changed. The Inside Baseball on what’s going on is noteworthy.
According to data provided to SCAA by Mintel, the market research firm, the number of US coffee shops should be about 32-thousand now, which says that the growth rate for the number of domestic outlets is at about three-to-four percent; far below the twenty-five to thirty percent rate of twenty years ago, when the number of stores was surging to fill unserved consumer desire for a better cup, offered from more interesting retailers, than those who sold coffee at that time. Even with Starbucks amounting to between 20-25% of the total, the US market for independent retailers is growing sustainably, but this is not stirring to those who focus on the money that an enthusing market can generate. Not when the international coffee market is gushing with growth.
Those ever-enticing international markets, particularly those in Asia and the middle East, continue to grow in the same pattern and just a bit slower (expected to be up 25% by 2020) than we saw domestically in the last quarter of the twentieth century. It is no wonder that those in the power seats of the former US specialty trade association have deployed their assets to face East, and the new opportunities, rather than to support the US home market members. These people are very smart. They are anticipating that their cups will shortly runneth over.
In the last weeks of 2016 the Arabica markets gave back much of their earlier-in-the-year gains, which the folks at the mammoth US roaster J.M Smucker must have anticipated as they lowered their roast coffee prices by 6% in May 2016. Among other factors, the large Arabica green coffee demand and diminished Robusta availability pushed the market upward in recent months, only to stumble badly toward the end of the year. Will the market continue its recovery, or hit resistance and slump back toward the 120’s?
Agrimoney.com, the UK-based agricultural business internet news source, reports that the ICO believes that Arabica supply will increase about 1% in 2017, while the Robusta supply will shrink by 6%. That should keep Robusta prices high and push Arabicas even higher, if the numbers prove real and there are no other intervening factors in the marketplace, and there are always other factors to be considered. The ICO thinks that consumption may fall off in 2017, which should act as a release valve on prices. Respected American soft commodities analyst, Judith Gaines Chase, doesn’t think so. Smucker, who previously, and perhaps precipitously, lowered their prices earlier in the year, have decided that now is the right time to correct their price course, and have announced an increase of 6%, which may embolden the bulls. But, remember fellows; they got it wrong last time. Maybe the market just oversold after overheating. Maybe it’s just that simple.
Independent small roasters, and roasting retailers should, of course, ignore all this if they can. Tend to your business. Slurp, spit, and buy the beans you choose as your needs require, trying as best you can to ignore the storm outside. Adjust your prices as you must, put your courage in a sticking place, and play long ball. The game is to the fellow who stays the course, and not to the smart aleck who behaves like he knows something you don’t. W.P Kinsella had it right. Go the distance.
The market is rallying as I am writing; moving above its 200 day and 100 day moving average since it appeared to bottom in December. The market doesn’t seem to want to grant us a slide that sticks. So, what is a fellow to think? One thing every fellow knows is that you can always rely on your mother. I don’t think my Mom ever saw Joe D play ball. She did go to Richmond Hill High School with Phil Rizzuto, a Yankee shortstop of distinction, who stole 149 bases in his career; a good many of them by sliding in safe. So, the question lingers, is it time for a slide? As a youngster, when I’d ask my Mom for something she didn’t want to grant, Dellie would say, “We’ll see,” and that is the case here. We’ll see.
Specialty coffee pathfinder, Donald Schoenholt, has been roasting coffee, and writing about his love for the stuff, and his fellow roasters since 1963. He can be found at