Coffee futures in New York skyrocketed by over 6% on Monday, reaching a new all-time high above $4.30 per pound on the ICE exchange. This surge is attributed to panic buying among market participants due to limited coffee availability, particularly in Brazil, the world’s largest coffee producer.
Key Highlights:
Record Prices:
Arabica coffee futures have hit record highs for the 13th consecutive trading session.
The spot contract peaked at $4.3195 per pound, closing up 6.2% at $4.211 per pound.
Market Concerns:
Reports of dry, hot weather forming over Brazil’s coffee-growing regions have intensified fears of reduced supply.
Farmers have sold approximately 85% of the current crop and are hesitant to sell the remaining stock, contributing to the price increase.
Expert Insights:
Bob Fish, co-founder of Biggby Coffee, indicated that prices will likely continue to rise unless there is a significant improvement in yields from Brazil and Vietnam or enough demand destruction in consuming countries due to high prices.
He advised U.S. coffee shops to consider raising their prices to maintain profit margins.
Price Trends:
Coffee prices have increased by around 35% this year, following a 70% surge last year.
Concerns about low stocks in Brazil, which produces nearly half of the world’s arabica coffee, continue to drive the market.
Speculation and Production Outlook:
Speculators in the ICE arabica market have reduced their net long positions by 3,130 contracts to 50,333 contracts in the week ending February 4.
Some traders believe the next Brazilian harvest could surpass expectations, with projections for 64.1 million bags in 2025/26, up from 63.4 million in the previous season.
Robusta Coffee and Other Commodities:
Robusta coffee prices rose 2.4% to $5,697 per ton, having previously reached a record high of $5,840 on January 31.
In other soft commodities, New York cocoa fell 2.3% to $9,878 per ton, while raw sugar futures rose 0.7% to 19.50 cents per pound.