Coffee futures topped $4 a pound and touched the highest since February as an extended price rally driven by worries over tight supplies and trade tensions forced traders to exit the market.
Prices of arabica, the variety favored by chains such as Starbucks Corp. for specialty brews, climbed as much as 6.2% on Monday to $4.21 a pound. Futures have jumped roughly 50% since early August amid dryness in top grower Brazil, US tariffs on supplies from the South American nation and smaller inventories.
The surge in prices has put increasing financial pressure on coffee industry players including cooperatives and roasters, translating “not only into higher consumer prices but also into growing liquidity and financing strains – a precarious combination,” according to a note from Germany-based importer List + Beisler.
Along with the price rally, money managers boosted net-bullish bets to the highest since May. That has helped push arabica into overbought territory, with the 14-day relative-strength index above 70 — a level that can suggest that futures have rallied too fast.
That in turn has pushed some traders to cover short positions, sending prices even higher, according to Judy Ganes, president of J. Ganes Consulting. The weather is dry but not abnormally so, Ganes said, adding that the market is “on anxiety” because of separate weather concerns earlier this year that impacted bean sizes.
Meanwhile, despite better production globally, coffee from outside Brazil is still commanding high prices because “there’s a scramble to try and get your hands on as much coffee as possible from other origins, and that’s because of tariffs,” she added. That has led to beans being sold to roasters instead of the futures exchange, with exchange-certified stockpiles at the lowest since May 2024.
The US Department of Agriculture in June projected 2025-26 output at a record 178.7 million bags, citing a stable production outlook in Brazil and recovering output in other origins such as Vietnam.
“We should be seeing prices coming down unless there is some major issue with the flowering for the Brazilian 26-27 crop, and that story isn’t written yet. Even with the couple of cold snaps, you could still wind up with a decent crop,” Ganes said. “To me, this is all financial, and it’s being tripped up by the tariffs.”
Brazil’s top arabica coffee areas will receive only sparse showers over the next five days, Climatempo meteorologist Nadiara Pereira wrote in a Monday note. Rains could intensify at the beginning of next week, she added.
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