Mark Fichtel, chief executive of the New York Board of Trade, which oversees the trading for coffee and all the other commodities, said it would have been technically possible to resume trading on Sept. 12, because a duplicate trading floor had been built in Long Island City five years ago in response to the 1993 bombing of the trade center. The delay of four trading days was caused by logistics, Fichtel said.
The cost of keeping that backup system equipped and ready to go, with duplicate files and computer systems, was about US$300,000 a year. Fichtel said there was some resistance to the concept "especially around the time the bills had to be paid." But having such a detailed contingency plan meant the exchanges could resume trading soon after the disaster, and did not have to fear losing business to competing exchanges like the London Coffee Exchange.
Right now, the two carpeted trading pits are used in rapid-fire 90-minute sessions by traders buying and selling futures and options on coffee and all the other commodities. Before Sept. 11, each crop was traded for five hours a day in its own trading pit. Now there are only two pits for all of the commodities. Fichtel said that by the middle of November, two additional pits would be opened, increasing daily trading time to two hours for each commodity. By the end of January, two more pits will be added, lengthening the daily trading sessions to three hours.
While that will help restore the trading process to normal in New York, it will not help resolve the serious problems in the world coffee market, which is of vital importance to 50 developing countries.
"There's definitely a temporary glut that's driven prices so low it's become a crisis," said John M. Talbot, an assistant professor of sociology at Colby College in Maine, who is writing a book on coffee.
"Chances are that after a few years, supply will be brought back into balance with demand. But the devastation that will happen in the meantime is morally unacceptable."
Talbot said the instability in coffee prices had been caused in large part by the cancellation of the International Coffee Agreement in 1989. The agreement was an attempt by the US and other democracies in the Cold War to support the economies of developing countries and prevent the Communists from making political inroads. The agreement kept prices high and established production quotas to balance supply and demand.
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