Coffee Prices Plummet Amidst Liquidation and Sugar Falls

Coffee prices have fallen sharply due to long liquidation, with sugar also declining. The S&P GSCI Coffee Index has dropped, and the Arabica coffee price has reached a seven-month high. However, the price has since fallen, while cocoa prices have risen. The market remains volatile, with various factors influencing the prices of these commodities.

Coffee prices have experienced a sharp decline due to prolonged liquidation, with the S&P GSCI Coffee Index dropping significantly. The Arabica coffee price reached a seven-month high but subsequently fell, while cocoa prices have risen. The market remains volatile, with various factors influencing the prices of these commodities.

According to Reuters, the S&P GSCI Coffee Index has fallen, and the Arabica coffee price has reached a seven-month high SOFTS-Arabica coffee hits 4-1/2 month high, cocoa also up^[2]. This fluctuation is attributed to long liquidation in the coffee market, which has led to a decrease in prices. However, the recent rise in cocoa prices indicates a more favorable market condition for the cocoa industry.

Coffee Holding Co., Inc. (NASDAQ: JVA) reported mediocre Q3/FY2025 results, with a steep drop in green coffee prices negatively impacting the company's derivative positions Coffee Holding: Strong Quarter Ahead (Rating Upgrade)^[1]. Despite the temporary hit to margins, the company's sales reached a new multi-year high of $23.9 million, driven by higher private label and green coffee sales. Coffee Holding used the price decline to increase inventories by more than 25% before new tariffs on Brazil imports went into effect on August 1.

Since the end of the third quarter, coffee futures have recouped their recent losses and moved to new all-time highs. This recovery is expected to boost Coffee Holding's fourth-quarter results, with substantial derivative gains and the sale of inventory purchased at bargain prices in Q3. The company's recent acquisition, Empire Coffee, has also turned profitable, contributing to the expected strong fourth-quarter performance.

The market's volatility is influenced by various factors, including long liquidation in the coffee market, tariffs, and the overall economic conditions. Investors should closely monitor these factors as they may significantly impact the prices of coffee and other commodities.