Coffee futures in New York jump 6% to new record amid 'panic buying'

Yahoo

10-02-2025

By Maytaal Angel and Marcelo Teixeira
NEW YORK (Reuters) -Coffee futures in New York rose more than 6% on Monday in the ICE exchange to a fresh all-time high above $4.30 per pound, with some market participants citing panic in the market amid limited coffee availability.
Arabica coffee futures hit a record for the 13th straight trading session. Reports of a dry, hot weather system forming over Brazil's coffee areas helped to drive the new price peaks, as farmers in the world's top grower are reluctant to sell.
"Panic has finally shown up, prices will continue to rise," said Bob Fish, co-founder of coffee franchise Biggby Coffee, who has 350 stores in several U.S. states.
"There are only two things that can stop this: one, Brazil and Vietnam have a good yield year (that is not expected until August 2026). Two, there is enough demand destruction in consuming countries because of the price increases," he said in a note about the rally.
Fish suggested that coffee shops in the U.S. raise their prices, or risk seeing their profit margins "evaporate".
Coffee futures in New York , seen as a global price benchmark, hit a record of $4.2410 per lb earlier, closing up 6.2% at $4.211 per lb. The spot contract, which expires in March, hit a peak at $4.3195/lb.
Prices are up around 35% so far this year after soaring 70% last year.
There is concern in the market about low stocks in Brazil, which produces nearly half the world's arabica.
Farmers there have sold some 85% of the current crop and are in no rush to sell more.
"The coffee left in the balance sheet might be in the 'wrong' side of the world, lying at the hands of strong Brazilian producers," said a coffee broker, suggesting that farmers in the country are well financed.
Dealers say, however, the rally in arabica has to some extent become self-perpetuating and out of sync with fundamentals.
"There are those who believe the next Brazilian harvest could be better than expected, not so much as to exceed last year's, but enough to make the outlook a little brighter," said trader Icona Cafe.
Broker Hedgepoint even expects Brazil to produce more coffee this year than last, noted Icona, with 64.1 million bags pencilled in for 2025/26 versus an estimated 63.4 million for the prior season.
Meanwhile ICE arabica speculators - key in driving the current price surge - cut their net long position, or bets on further price gains, by 3,130 contracts to 50,333 contracts in the week to February 4, industry data showed.
Robusta coffee, a cheaper alternative to arabica used mostly to make instant coffee, rose 2.4% at $5,697 a ton, having hit its highest on record on January 31 at $5,840.
In other soft commodities traded, New York cocoa fell 2.3% to $9,878 a ton, having posted a loss of 7% last week, while London cocoa fell 1.7% to 7,919 pounds per ton.
Raw sugar futures rose 0.7% at 19.50 cents per lb, while white sugar rose 0.3% at $519.40 a ton.