Coffee futures had a week with almost no precedent. The September contract rallied 72.15 cents from Monday to Monday, closing at 349.95 US cents per pound. According to Sucafina’s latest coffee report, weekly moves of this scale have occurred only four other times in the past 30 years.
Monday did most of the work: a 48.75-cent gain, the largest single-day rise in the market’s history and its first 15% single-day print. Measured against the 250-day standard deviation of returns, it was a 6.75 sigma event. Sucafina’s analyst reaches back to the 1994 black frost in Brazil for the nearest comparison.
What set it off? Sucafina’s best explanation is money flow. With the Strait of Hormuz situation subdued, oil prices have fallen, and macro funds went looking for somewhere else to put long positions. Coffee, cocoa, and orange juice, the big winners during the last El Niño in 2024, were obvious candidates now that El Niño has officially been declared again.
The rally then fed itself. Rising margin requirements put severe financial strain on even well-capitalized merchants, and mid-sized Brazilian cooperatives sitting on a near-record crop at peak harvest had to reduce hedges into the rally, adding to Monday’s rise.
Sucafina expects origin selling to step in if prices stabilize, with another test of the $3.50 highs likely this week and a settle around $3.15 if Monday’s highs hold. The full report walks through the positioning and what to watch next.
For more insights into the global coffee market, explore Vesper for free.
