I highlighted coffee’s ascent in my Q1 Barchart article on soft commodities. I wrote:

At over the $3.55 per pound level on April 11, the coffee futures remain above the previous $3.3750 per pound peak reached in 1977 as supply concerns continue to keep coffee prices elevated.

Expect volatility to continue in the soft commodities sector over the coming weeks and months. As high prices cure high prices, low prices tend to cure low prices in commodities.

While coffee corrected from the high, and the price briefly fell below the 1977 peak, the futures have moved higher and are now heading to a challenge of the record peak. 

Coffee has rallied since the April 9 low 

After correcting to an April 9 low, coffee futures took off on the upside. 

The daily chart shows that the now active month, July ICE Arabica coffee futures, rallied from the April 9 low of $3.2390 per pound over $4 per pound in late April and early May. 

The five-year monthly chart highlights the 24.7% correction from the February record high to the April 9 low and price recovery in the volatile Arabica coffee futures arena. 

May futures rolled to July

One potential factor leading to coffee’s correction was the rollover from the ICE May futures contract to the now active July contract. 

Open interest, the total number of open long and short positions in the coffee futures market, fell by over 18.3% from 176,927 contracts on March 31 to 144,530 contracts on April 21 as the futures contracts rolled from May to July. Profit-taking likely caused the open interest metric to decline. 

Supply concerns and a weak dollar continue to grip the coffee market

Low rainfall in Brazil, the world’s leading Arabica coffee producer and exporter, has caused supply concerns. Meanwhile, the weaker U.S. dollar has added bullish fuel to coffee’s fire. 

The six-month daily chart highlights the dollar index’s decline from over 110 in January 2025 to below 98 on April 21, 2025. A weak dollar tends to support higher commodity prices. The index was below the 100 level in late April.  

The long-term trend remains bullish

Coffee’s long-term path of least resistance remains bullish in early May 2025. 

The quarterly chart from the early 1970s shows the explosive bullish trend since 2019 when the low was below 90 cents per pound. Coffee futures had not traded above $3.3750, the 1977 high, or above $3 per pound since 2011.

In May 2025, coffee’s trend remains bullish, and the prospects suggest that higher highs could be on the horizon at around $4 per pound on the July contract. If the price action in the ICE cocoa and FCOJ futures are models,  coffee could move considerably higher than the most recent high. Cocoa rallied over 150% above its previous 1977 peak at the late 2024 high, and FCOJ surged over 138% above its previous 2016 peak. A similar move in coffee would take the soft commodity north of $4.70 per pound and perhaps as high as $5 or higher. 

Futures are the only way to participate in the coffee market

The only routes for a risk position in the Arabica coffee market are the futures and future options on the Intercontinental Exchange. No ETF or ETN products track coffee futures, as iShares delisted the NIB ETN in June 2023. 

Each coffee futures contract contains 37,500 pounds of Arabica coffee beans. At $4.00 per pound, the contract value is $150,000. The ICE original marginal requirements are currently $11,541 per contract, meaning market participants can control $153,750 worth of coffee futures for a 7.70% downpayment. If equity drops below the variance margin level at $10,410 per contract, the exchange requires posting additional margin. ICE also lists put and call options on the Arabica coffee futures contract. Coffee’s high price variance makes the options expensive in the current environment. 

Coffee remains in a bullish trend, and the potential for even higher record highs over the coming weeks and months is high.