Coffee futures extended their rampant rally to the highest in more than four decades in New York amid global supply worries, threatening to further raise costs for consumers.
Arabica beans — the variety favoured for specialty brews — climbed as much as 3.1%, hitting the highest since 1977. The price have jumped almost 70% this year.
A severe drought earlier this year in Brazil has fuelled worries about the country’s output. That comes on top of concerns about bean supplies from Vietnam, after a key coffee belt was hit by dryness during the growing period and heavy rains arrived at the start of harvest.
Brazil and Vietnam are the two biggest global growers, though the latter grows mainly Robusta beans used mainly in instant coffee.
The upward movement of coffee futures prices is set to add to the pain facing cafes and roasters, ultimately boosting costs to consumers. Along the supply chain, sellers have raised prices and scrapped discounts to protect their margins.
Nestle, the world’s biggest coffee maker, said in November that it would raise prices and make packs smaller to blunt the impact of more expensive beans.
“The rally is due to a number of complex circumstances”, including concerns about Brazil’s output in the 2025-26 season, as well as shipping and logistical challenges, Rabobank analyst Carlos Mera said.
Other factors are the uncertainty over the start date for the European Union’s deforestation rules and the frontloading of sales to the US ahead of potential trade tariffs under a Trump administration, he said.
Arabica was last up 2.7% at $3.17 a pound in New York, on course for a sixth straight daily increase. The advance has pushed the 14-day relative-strength index well above 70, a level that can suggest that the market has become overbought.
“Despite price rises, arabica coffee trades are moving at a slow pace, given that producers are unwilling to close deals, expecting new increases,” the Brazilian research institute Cepea said.
Robusta coffee, the more budget-friendly type used in instant drinks, has also soared this year, rising about 85% in London.
The increased costs of hedging — due to higher margin calls — and the possibility of producer defaults have contributed to panic buying recently, analysts at the coffee trader Sucafina wrote this week.
This year’s rally has been accompanied by fund managers holding large bets on higher prices. While speculators’ net-long position in arabica is below a peak set earlier in the year, bullish wagers remain at an historically high level, US Commodity Futures Trading Commission data show.