Coffee futures in free fall, NY and London down by 6.8% and 6.9%

MILAN – Coffee futures fell sharply yesterday, Wednesday 17th September. In New York, the contract for December delivery lost over 33 cents (-6.8%), accelerating the downward correction that had already begun the previous day, and closed at 375.65 cents – over 48 cents below Tuesday’s highs, when the contract had recorded an intraday high of 424 cents, not far from last February’s historic highs.

The certified Arabica coffee stocks held against the New York Arabica market registered yesterday a decrease of 8,925 bags to 659.949 bags, mostly from Mexico (181,836 bags), Brazil (79,151 bags), Nicaragua (72,639 bags) and Honduras (71,673 bags).

The ICE Robusta also plummeted, with the November contract falling by $331 to settle at $4,450 (-6.9%).

The massive sell-off was triggered by weather news from Brazil, where rainfall is expected to intensify in the coffee belt starting next week.

The rainfall would come at the right time to kick-start the flowering of the new Arabica crop, the success of which will be crucial to rebalance the markets next year.

Markets have once again showed their extreme volatility. Between 2nd and 16th September, New York oscillated within a range of 58.5 cents. This is more than an entire annual range of a few years ago.

Meanwhile, London saw an intraday low of $4,303 on 5 September and an intraday high of $4,860 on 16 September, representing a fluctuation of $557 in less than two weeks.

What is going on in the futures markets?

“Speculative managed money funds now see two clear targets: under-covered roasters; trade and producers under heavy margin pressure, being forced to lift hedges,” explains US trader Cardiff Coffee Trading in a note to clients, as quoted by Reuters.

This means – says the same source – that the U.S. coffee industry had been late on hedging amid the tariff situation.

Meanwhile, traders and producers, who usually take a sold position in futures, are liquidating those to avoid paying big margins to the exchange— a move that pushes prices up. Funds are taking advantage of this to boost their buying.

“I attribute much of the recent price rally to tariffs and the resulting disruption to the supply chain,” StoneX broker Tomás Araújo told Reuters, citing concerns about weather patterns in Brazil as well.