4 ms·

It seems like there was lower coffee production so they hiked prices due to the more limited supply. It also seems like they hiked prices too high with supplier

by mdasen 2y ago

It seems like there was lower coffee production so they hiked prices due to the more limited supply. It also seems like they hiked prices too high with suppliers saying that they've only sold 30% of their production when they'd normally have sold 100% by now. It does kinda show how markets don't just magically hit an equilibrium price. The prices went up due to limited supply, but then the sellers couldn't sell at those higher prices. Negotiations over price aren't going fast and buyers are only buying what they can immediately use/sell.

ericjmorey 2y ago
Sellers will start holding more inventory. and wait for buyers to run through theirs.
0_____0 2y ago
I'm curious to know from someone who understands better- isn't this the kind of volatility that futures markets are intended to prevent? If actual product movement has changed significantly then is it just that this moment is especially volatile, or are futures as a mechanism not particularly meant to deal with this?
- woleium 2y ago
  That was always touted as a reason, yes. I am sure it is partly true, within certain bounds.
- shermantanktop 2y ago
  Futures aren’t meant to do anything, are they? Like so much of the market, they are just another partial-information lottery which isn’t explicitly forbidden by weak regulators. (But I’m not someone who knows better)
  - jgalt212 2y ago
    futures markets (among other things) allow producers to temporally match assets and liabilities.
  - Marazan 2y ago
    Futures market started as a way of (and in America were strictly limited to) prpducers and wholesale buyers to hedge/fix their costs. Then American regulators started handing exceptions to allowable market participants out like candy and suddenly the markets are majoritarily financial middlemen who do not want to take delivery. Futures markets make lots of sense and are very useful. How they are currently constituted does not.
jgalt212 2y ago
> It does kinda show how markets don't just magically hit an equilibrium price. There's lot of research on situations where market prices fail to work, but not much (as far as I'm aware) of when they largely work, but there are times when the market seizes up (and how to avoid such situations). or do the risk of such situations are so great that a product should not a be allowed to have a truly "free" market. e.g. petroleum.
- fsckboy 2y ago
  it's difficult to impossible to believe that there is any failure currently in the international coffee market. (i'm replying as much to GP as to you, not disagreeing with you) >markets don't just magically hit an equilibrium price markets do magically, and quickly, hit a "market clearing price" where all the bids and asks that match are executed. the market can also slow when there are plenty of bids and asks but they are too far apart. an "equilibrium price" seems to imply some sort of stability, but when the future is uncertain, prices will be uncertain, without implying a market failure. there can be "information failures" that steer prices wrong, but prices can be uncertain just the same even given all current information.
crazygringo 2y ago
> It also seems like they hiked prices too high How is that even possible? > It does kinda show how markets don't just magically hit an equilibrium price. Generally, markets do "magically" hit that. Can you explain why, at the moment demand dried up at the higher price, the suppliers didn't immediately drop the price to meet demand? That's generally how these things work. Unless there's some kind of cartel operation at play here. In which that's to blame, not the market. Can you provide any links with greater detail?
- vasco 2y ago
  Whenever someone says the market doesn't work it's just because it's not doing what they think it should, as if there's some pre-ordained magical prices.
  - ab5tract 2y ago
    A market that allows gamblers to cause resources to rot rather than lose money on their own bad bets is working exactly as a market should? Seems to me the bigger magical leap here is in the observer who considers this to be either desirable or necessary.
    - vasco 2y ago
      If the people that wanted to buy bought, and the people that wanted to sell sold, and there was no fraud, yes.
      - ab5tract 2y ago
        This is why no one should take capitalist true believers seriously. It’s not an efficient (let alone moral) distribution system if one of its outcomes is spiraling prices that are irreflective of genuine market demand. The whole problem highlighted here is that the people who want to sell cannot sell because the buyers don’t want to eat their consequences and man up to the loss on their gambling.
- hedora 2y ago

by mdasen 2y ago

ericjmorey 2y ago

Sellers will start holding more inventory. and wait for buyers to run through theirs.

0_____0 2y ago

I'm curious to know from someone who understands better- isn't this the kind of volatility that futures markets are intended to prevent? If actual product movement has changed significantly then is it just that this moment is especially volatile, or are futures as a mechanism not particularly meant to deal with this?

woleium 2y ago
That was always touted as a reason, yes. I am sure it is partly true, within certain bounds.
shermantanktop 2y ago
Futures aren’t meant to do anything, are they? Like so much of the market, they are just another partial-information lottery which isn’t explicitly forbidden by weak regulators. (But I’m not someone who knows better)
- jgalt212 2y ago
  futures markets (among other things) allow producers to temporally match assets and liabilities.
- Marazan 2y ago
  Futures market started as a way of (and in America were strictly limited to) prpducers and wholesale buyers to hedge/fix their costs. Then American regulators started handing exceptions to allowable market participants out like candy and suddenly the markets are majoritarily financial middlemen who do not want to take delivery. Futures markets make lots of sense and are very useful. How they are currently constituted does not.

jgalt212 2y ago

> It does kinda show how markets don't just magically hit an equilibrium price. There's lot of research on situations where market prices fail to work, but not much (as far as I'm aware) of when they largely work, but there are times when the market seizes up (and how to avoid such situations). or do the risk of such situations are so great that a product should not a be allowed to have a truly "free" market. e.g. petroleum.

fsckboy 2y ago
it's difficult to impossible to believe that there is any failure currently in the international coffee market. (i'm replying as much to GP as to you, not disagreeing with you) >markets don't just magically hit an equilibrium price markets do magically, and quickly, hit a "market clearing price" where all the bids and asks that match are executed. the market can also slow when there are plenty of bids and asks but they are too far apart. an "equilibrium price" seems to imply some sort of stability, but when the future is uncertain, prices will be uncertain, without implying a market failure. there can be "information failures" that steer prices wrong, but prices can be uncertain just the same even given all current information.

crazygringo 2y ago

> It also seems like they hiked prices too high How is that even possible? > It does kinda show how markets don't just magically hit an equilibrium price. Generally, markets do "magically" hit that. Can you explain why, at the moment demand dried up at the higher price, the suppliers didn't immediately drop the price to meet demand? That's generally how these things work. Unless there's some kind of cartel operation at play here. In which that's to blame, not the market. Can you provide any links with greater detail?

vasco 2y ago
Whenever someone says the market doesn't work it's just because it's not doing what they think it should, as if there's some pre-ordained magical prices.
- ab5tract 2y ago
  A market that allows gamblers to cause resources to rot rather than lose money on their own bad bets is working exactly as a market should? Seems to me the bigger magical leap here is in the observer who considers this to be either desirable or necessary.
  - vasco 2y ago
    If the people that wanted to buy bought, and the people that wanted to sell sold, and there was no fraud, yes.
    - ab5tract 2y ago
      This is why no one should take capitalist true believers seriously. It’s not an efficient (let alone moral) distribution system if one of its outcomes is spiraling prices that are irreflective of genuine market demand. The whole problem highlighted here is that the people who want to sell cannot sell because the buyers don’t want to eat their consequences and man up to the loss on their gambling.
hedora 2y ago