Arabica coffee prices approach record highs due to concerns over production in Brazil

Coffee futures prices fluctuated around record highs in a volatile trading session, as speculators bet that tariffs and drought would reduce supply from Brazil — the leading producer.

The arabica contract with the highest trading volume on the New York exchange on Tuesday reached $4.24 per pound — just slightly below the historical high of $4.29 reached in February. The price of arabica coffee futures has risen by about 50% since the beginning of August due to concerns that supply from Brazil will not be sufficient to offset declining inventories, according to Bloomberg. According to a report from trading company I & M Smith Ltd., the surge above $4 was driven by speculative buying amid low trading volume. This upward trend has triggered further buying orders, "in a situation where there is almost no selling activity to curb the rise." Laleska Moda, an analyst at Hedgepoint Global Markets, said that speculative activity increased "especially after the release of Brazil's August export data and the continued decline in arabica inventories." She added: "Export volumes from Brazil to most markets are generally decreasing, but we have noted a significantly sharper ...