Surge in Coffee Prices Driven by Trading Activity and Market Dynamics

Between June 26 and July 6, coffee prices rose from $2.76 to $3.48 per pound, according to Trading Economics. Since then, prices have remained above $3 per pound. This increase occurred due to consecutive waves of buying activity in the market.

Oliver Broster, senior manager for coffee analysis at Expana, explained that a series of events led to increased trading activity. This started in early June before the New York July 2026 coffee options expired. Traders were managing their positions, which initially supported the market. The first notice day for the NY July 2026 coffee futures market also approached, pushing small and medium roasters into the market to fix their contracts, further supporting prices.

El Niño may have contributed to the price increase, although it was not the main factor. Macro fund strategies based on El Niño were implemented, further strengthening the market as seen in the Commitment of Traders (COT) reports.

The market saw a reduction in short positions, initially by institutional investors and later due to financial distress. This reduction contributed to the market's strength.

As the Brazilian harvest accelerates, the future of coffee prices depends on whether farmers decide to sell or hold their coffee. The futures market is currently inverted, offering better prices today than in the future, which may influence farmers' decisions.

Broster noted that many farmers might need to sell due to financial necessities, which could ease market tightness. The adequacy of Brazilian volumes to meet industry needs and potential supply from other regions remain critical factors for future prices.