Arabica Coffee Futures Trading at 18-Month Highs

Arabica coffee futures trading has reached near its highest level since October 2022 as hedging funds exiting the cocoa market are now piling into coffee.

According to Bloomberg, money managers increased their bullish bets to an all-time high in the week ended April 2, according to the latest data from the Commodity Futures Trading Commission. Meanwhile, investors reduced their bullish bets on cocoa after a record rally saw prices more than double this year.

Elia Bezov, a coffee trader at Sukafina, said, “We are currently looking at the largest net speculative position in coffee futures history without a significant story to justify it, outside of the cocoa market, which is insane.” “However, once the tap is turned off, it takes time for speculative interest to wane and reverse.”

Marcelo Moreira, who tracks coffee markets at Archer Consulting, mentioned that investor optimism about Arabica coffee is also supported by technical factors. The last time futures reached the current level was in 2022, and the upward movement only stopped after reaching its peak at $2.4 per pound. He added, “This means there is no short-term resistance.”

The recent surge in Arabica coffee futures has helped widen the contract’s premium over cheaper Robusta coffee. However, the historical spread between the two varieties remains low, indicating that roasters are likely to replace Robusta with Arabica in their blends.