Coffee price rise: overview
- Coffee prices rose from $2.76 to $3.48 per pound
- Consecutive waves of buying activity helped drive market strength
- Delayed purchasing by roasters increased demand near contract deadlines
- El Niño concerns and fund activity added further support
- Future prices depend on Brazilian harvests and farmer selling decisions
Coffee prices have recently experienced a spike.
Between 26 June and 6 July, they rose from $2.76 (€2.43) per pound to $3.48 (€3.06) per pound, according to Trading Economics. Since then, the price has stayed well above $3 (€2.64) per pound.
So what is behind this rise?
The recent spike
The rise in coffee prices is down to a flurry of trading activity, explains Oliver Broster, senior manager for coffee analysis at commodities analytics company Expana. A combination of events has created “several consecutive waves of buying”.
This started in early June, just before the New York July 2026 coffee options expired, he says. Options give the buyer the right to buy a certain asset, but do not oblige them to.
Broster believes that traders were managing their positions, meaning that trading activity had increased and the market was, initially, being supported.
Meanwhile, the first notice day for the NY July 2026 coffee futures market was approaching. Futures contracts are agreements to buy assets at a future date, and the first notice day marks the point when traders who remain in the contract become involved in the process to receive the relevant asset (although most traders close their positions or roll them forward before this day to avoid this).
While large international players were extending coverage, explains Broster, he has the impression that small and medium roasters were still essentially living ‘hand to mouth’, and were not willing to commit to securing their future supply through futures contracts due to high prices, especially with a large Brazilian crop on the horizon.
However, as the deadline approached, they were forced into the market to fix their NY July contracts. This increased buying activity and, in turn, lent support to the market.
El Niño, Broster says, may have been a contributing factor, although far from the defining one. Many believe that when macro fund strategies based on El Niño were implemented, this further strengthened the market. This view, says Broster, looks to be supported by data in the Commitment of Traders (COT) reports, which collate trading data, specifically related to futures contracts, and are released weekly. Macro funds trade asset classes predominantly driven by macroeconomic factors, according to hedge fund Aurum.
Finally, a range of short traders closed their positions. Firstly, this was done by institutional investors, and then it was driven by financial distress, further contributing to the market.
Will they continue to rise?
If coffee prices are to continue to rise, says Broster, more market participants must enter long positions, meaning positions where they expect coffee prices to continue to rise. He believes that this is unlikely.
The number of short positions in the market has been substantially reduced, and if the remaining positions were forced to buy it would be unlikely to create the necessary momentum to raise prices.
Industry has in the past clearly demonstrated that it is unlikely to extend coverage or buy coffee when they view prices as excessive.
On the other end of the supply chain are the farmers themselves. While the harvest in Brazil, the world’s biggest coffee producer, has been delayed, explains Broster, it is now accelerating.
The futures market is currently inverted, meaning that farmers will get a better price for their coffee today than tomorrow. However, many will hope that the current pricing situation will change and they can get more money for their coffee in the future (a view which is, after all, backed up by recent price increases). If farmers do hold, coffee prices will likely go up further.
Nevertheless, many farmers will not be able to afford to hold their beans back, as they have expenses that need to be paid and they need this money quickly. In Broster’s view, they are likely to sell, relieving the tightness of the market.
It also remains to be seen whether the volumes from Brazil will be sufficient to cover industry’s needs, as well as whether supply from elsewhere can plug the gap if volumes from Brazil are not enough.
Overall, the future of coffee prices remains uncertain. It will depend on the harvest, market dynamics and the decisions of the farmers.
