Arabica coffee prices could stay unstable even as the world grows more beans, because stocks held in exchange warehouses remain very low, Moneyweb reported.
Exchange-certified coffee stocks have fallen to their lowest point since 1999. This helped push prices close to their highest level this year, near $3.50 a pound.
On Friday, coffee futures in New York jumped by as much as 5.6%. They were on track for their biggest weekly gain since 10 July.
“The math changed, and all of a sudden it didn’t make sense to deliver as much of that,” said Judy Ganes, president of J. Ganes Consulting.
Ganes said deliveries to the exchange were easy when traders were paid more for delivering coffee sooner. That extra reward has since shrunk.
The 2026-27 season is expected to bring the biggest coffee surplus in years. Brazil, the top grower, may produce a record crop.
But traders and analysts are not sure current prices are high enough to send those beans to exchange warehouses. Many beans may go into private stocks instead.
Exchange warehouses act as a safety net for the coffee trade. They take in beans when demand is weak and release them when supply is short.
Roasters have used up much of that reserve. They are now buying beans directly at higher prices, which keeps coffee away from the exchange.
Prices may have to rise to attract more deliveries. That could force traders who bet on falling prices to buy back futures, pushing prices even higher. “There’s the possibility that someone gets squeezed,” Ganes said.
Many roasters pay for beans based on the futures price, plus or minus an amount for quality. Folgers maker JM Smucker Co. has said high futures prices are a reason it delayed plans to cut prices.
Oliver Broster, senior manager of coffee analysis at Expana, said the coming surplus could cause prices to fall sharply. He said this should already make the exchange an attractive place for some beans.
More Brazilian coffee entered certified stocks in September than in each of the 18 months before. About 72% of Brazilian bags passed the exchange quality test that month.
“It’s a huge crop. So in comparison with last year, there’s still a large quantity of excellent-quality Brazil,” Broster said.
Brazilian growers, who earned well from record prices in past harvests, have been holding beans longer while they wait for better offers.
Marcelo Moreira, an analyst with Archer Consulting in Brazil, said good Brazilian beans can earn a premium in some markets above what the exchange pays. A jump in Brazil’s currency after election results may also make farmers slower to sell.
StoneX senior trader Tomas Araujo said beans from places like Colombia also fetch higher premiums. He expects 50,000 to 70,000 Brazilian bags could reach the exchange in October, in time to settle December futures.
About 14,000 more bags of Brazilian coffee were waiting for a quality check in ICE-licensed warehouses than at the end of September. Brazil-based broker Thiago Cazarini said stocks must rise by a large amount before they soften prices.
Source: this article is based on reporting by Moneyweb. Image: Moneyweb. Written with the help of AI and published by the Tzaneen Voice Business desk. See our Editorial Standards.
Anelisa Nkuna covers business and money news for Tzaneen Voice. Anelisa reports on the rand, fuel prices, interest rates, jobs, Eskom, Transnet, farming and company results. The aim is simple: explain what the numbers mean for household budgets, small businesses and workers in South Africa.