By Maytaal Angel and Marcelo Teixeira
NEW YORK (Reuters) – A surge in coffee futures in New York has been reported, with prices skyrocketing over 6% on Monday at the ICE exchange, reaching a new historic high above $4.30 per pound. Market participants are pointing to a sense of panic due to limited coffee availability as a key driver behind this spike.
Arabica coffee futures have now reached a record high for the 13th consecutive trading session. The market is reacting to reports of adverse weather conditions forming over Brazil’s coffee-growing regions, leading to concerns among farmers, who are holding back on selling their produce.
Bob Fish, co-founder of the coffee franchise Biggby Coffee, shared his insights, stating, “Panic has finally shown up, prices will continue to rise.” He highlighted that only two factors could potentially halt this upward trend: a successful yield year in Brazil and Vietnam, not expected until August 2026, or a decrease in demand from consuming countries due to the rising prices.
Fish also recommended that coffee shops in the U.S. consider raising their prices to protect their profit margins amid the escalating costs. The global price benchmark, coffee futures in New York, hit a high of $4.2410 per lb before closing at $4.211 per lb, up by 6.2%. The spot contract set to expire in March reached a peak of $4.3195 per lb.
With prices up by approximately 35% this year following a 70% surge last year, there are growing concerns about low stocks in Brazil, a major arabica coffee producer. Despite selling 85% of the current crop, Brazilian farmers are in no rush to release more stock.
Market observers note that the rally in arabica coffee prices may have become somewhat detached from the underlying fundamentals, potentially driven by speculative activity. There are contrasting opinions on the upcoming Brazilian harvest, with some suggesting it could be more promising than anticipated, offering a glimmer of hope.
In the midst of the price surge, ICE arabica speculators have slightly reduced their net long position, indicating a more cautious approach towards further price increases. In contrast, robusta coffee, a cheaper alternative primarily used for instant coffee, rose by 2.4% to $5,697 a ton, hitting a record high on January 31 at $5,840.
In the broader soft commodities market, New York cocoa experienced a decline of 2.3% to $9,878 a ton following a 7% loss the previous week. London cocoa also fell by 1.7% to 7,919 pounds per ton. On the other hand, raw sugar futures rose by 0.7% to 19.50 cents per lb, while white sugar increased by 0.3% to $519.40 a ton.
(Reporting by Maytaal Angel and Marcelo
