My understanding is as follows -
CCL goes into contract negotiations based on quantity & I am not sure there are long term contracts like - 5/10 years. They use current market price of green coffee during contract negotiation & the moment contract is finalized, they place orders with green coffee producers.
As said in one of the conf call, almost 50% of the capacity for next financial year gets booked in December of current financial year. This consciously protects them against any coffee price variations & protects their margins in $$/T basis but maybe they take a hit in working capital due to higher inventory days.
The only scenario in which RM costs might impact margins is if green coffee producer is not able provide green coffee due to some special circumstances (like natural calamities etc.) but that would be an one-off event.
