|
|
 |
|
|
|
|
 |
|
|
|
|
|
Predicting the Future of Coffee: the Work of Judy Ganes, Coffee
Commodity Analyst
By David Griswold
|
|
Fresh Cup Magazine
November 2006
Photos: Brian Kimmel/Sustainable Harvest
PDF Format |
|
|
|
|
|
Coffee prices are set to rise, but this is one price spike you can't
blame solely on Hurricane Katrina. Industry analysts have been warning
for months that shortages caused by production slowdowns in Latin America
would hike prices for your morning java, not to mention that afternoon
frappucino.
The storm, to be sure, hasn’t helped the situation, but it now appears
the devastation to the Port of New Orleans did not wipe out the coffee
stockpiles there. The Reuters news agency quotes a port warehouse spokesman
in New Orleans as saying nearly half the unroasted coffee stored in
the port is salvageable.
|
|
 |
|
|
|
|
|
As Judy Ganes begins to speak to a capacity crowd of coffee growers,
exporters and roasters in Oaxaca, Mexico, the room grows silent in rapt
attention. This coffee group, like so many others at trade conferences
at which she speaks, is eager to hear what one of the top commodity
experts has to say. Ganes is clearly a preeminent commodity market expert,
something she’s been doing for more than 20 years. The coffee group
in Oaxaca listens as she shows graphs and charts illustrating the current
coffee crop sizes, consumer consumption trends, volatility of coffee
futures markets and other technical data to make her point that the
market is bound to rise—or fall—depending on what the numbers tell her.
“I try to take a longer term view of the market, says Ganes, who
now runs her own research and marketing firm, J. Ganes Consulting. “People
sometimes want instant gratification and are disappointed if the results
don’t happen immediately. I do not work for a trade house, own a farm,
roast, import or export coffee, or work for the government. Therefore,
I can be very objective in my views without the inherent biases others
might have. To me, it’s all about what the numbers show.”
|
|
|
|
|
|
Looking for what the numbers show is something Ganes does on coffee,
cocoa, sugar and orange juice, which shows the depth and flexibility
of her expertise. Prior to starting J. Ganes Consulting, she spent most
of her career on Wall Street working for Merrill Lynch and Shearson
Lehman as a senior softs analyst.
“When I first started as an industry analyst, all the brokerage houses
had commodity research departments,” explains Ganes. “One by one, like
a game of musical chairs … the departments fell due to budget cuts and
consolidation. I started my own research and consulting firm just after
9/11 because I now wanted to be the last man standing and survive.”
Yet with the coffee market now looking as though it will reach new
price levels that haven’t been seen in several years, more people are
looking to Judy Ganes to hear what she thinks will be the future of
coffee.
|
|
 |
|
|
|
|
“Of course, now commodities are in vogue again, and the brokerage
houses don’t have the research capabilities anymore,” says Ganes. “It
was very short-sighted on their part and to my benefit. There are a
few trade houses that have research and a small handful of private consultants,
but as far as I know, I am the only person globally to cover all five
soft commodities—sugar, coffee cocoa, cotton, and FCOJ (frozen concentrated
orange juice)—in any in-depth manner.”
Ganes explains that it hasn’t been hard
for her to be an expert in so many disparate commodity fields: “People
often ask how I juggle all five markets, and my response is that I don’t
know differently,” she says. “It’s what I’ve always done. I guess it’s
the same way I look in amazement at how a mother handles three, four
or five screaming children all under the age of 10 when I get exhausted
with just dealing with my daughter’s schedule!”
Ganes spends the bulk of her time preparing commodity reports, which are sent electronically
around the globe to the world’s top coffee buyers and sellers. In addition
to numerous industry conferences, she’s had the opportunity to address
important governmental agencies. “One of the incredible blessings of
my career has been to travel the world and meet with wonderful people
and experience cultures from all walks of life,” says Ganes. “Time and
time again, though, it is the children on the farms that I remember
the most, and I wish they all had opportunities for education and never
to feel hungry. Aside from my travels, having an opportunity to speak
at the CIA probably ranks up there.”
What can be most difficult for
a commodity analyst, she notes, is that when you describe expected future
trends in a commodity market, many in the audience are not going to
be pleased with your conclusions, having different interests depending
if they are a buyer or seller.
|
|
|
|
|
|
Obviously there are two sides to every market, so I am always at odds
with someone’s desires,” says Ganes. “When I was extremely pessimistic
on coffee prices a few years ago, I was told not to go to a specific
producing country because I might be shot. I normally don’t carry a
bulletproof vest!” But Ganes believes if she has a view that is contrary
to what someone might want to hear because of their own biases, it is
even more important for her to speak her mind and hope that they heed
the advice. She also hopes that they have protection—“commodity market
insurance”—which would be hedging using the tools available such as
futures and options. This way, she explains, if prices do move down,
a producer has locked in higher values, or conversely, a roaster has
purchased coffee at a lower price.
“My work brings me tremendous satisfaction, especially when I hear
feedback from clients that my guidance protected their business,” says
Ganes. “The markets are also very dynamic, so I never stop learning.
The day that I don’t learn something new is when I will get bored and
take down my shingle. Hopefully, that day won’t come for many, many
years.”
|
|
 |
|
|
|
|
|
|
|
