Arabica coffee futures jumped the most since the Dot Com era as worsening weather in Brazil and shrinking exchange-managed warehouses intensified concerns about near-term supply. This comes as El Niño threats rise across critical agricultural belts worldwide.

New York prices jumped as much as 18.5% on Monday to $3.57 a pound, the highest since January. This was the largest single-session gain since July 18, 2000.

Context on the squeeze: Traders had been expecting a large Brazilian crop, but rains have slowed the harvest, and growers are holding back sales in hopes of better prices.

Bloomberg noted: 

Technical factors also were at play. The Intercontinental Exchange last week raised margin requirements as prices increased, making it costlier for traders to maintain positions and potentially pushing some out of the market, said Judy Ganes, president at J. Ganes Consulting.

"This move is just one of those fear days and people covering," Ganes said. But it's hard to justify it fundamentally."

Bloomberg quoted Rural Clima meteorologist Marco Antonio dos Santos as saying that rain is forecast for a large part of Brazil in mid-July, which will be "detrimental" to crops, including coffee. "This is directly linked to El Niño, which has been gaining strength week after week," he added.

The rally adds to a broader El Niño-driven surge across soft commodities, with sugar, rice, and cocoa also rising.

Latest El Niño coverage:

Arabica inventories in exchange-monitored warehouses are at their lowest levels since March 2024.