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Do speculators make the coffee price?

Jan 13, 2026

Philipp Schallberger

In the fall of 2024, the price of coffee rose to record highs and remained higher than ever before throughout 2025. Why, exactly? I made two videos about it and saw the origin in Brazil's poor harvest, followed only then by excessive speculation. (<a href="https://www.youtube.com/watch?v=0holHifVNgM">Video</a> from January 2025) and an <a href="https://youtu.be/rJia7noSC-E?si=106t3_qZIUllG4eh">update</a> in November 2025.
In between, I repeatedly read and heard that this unprecedented rise was the direct product of commodity speculation and that many of the sharp fluctuations could not be explained rationally.
Attributing all movements to "speculation" was not convincing enough for me and, above all, not precise. Until then, I felt the word more than I understood it. So I wanted to know more and embarked on an intensive learning journey.
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At the beginning of this learning journey, I basically had only one question:
<ul>
<li dir="ltr">Who makes the coffee price?</li>
<li dir="ltr">And why does it sometimes move so sharply up or down, even within a single day?</li>
</ul>
I wanted to know if what you hear over and over again is really true: That speculation distorts prices. That investors drive the market. That speculation is the catalyst for upward or downward movements.
And I also wanted to know if we are making life harder for ourselves than it needs to be. Whether the idea that "the speculators" are to blame is correct. Or whether we are just using this idea to avoid understanding a more complicated system.
<h2><meta charset="utf-8"> <meta charset="utf-8">“Speculation is to blame!”</h2>
Since the price increase of green coffee on the stock exchange (the so-called C-Market) in November 2024, I have dealt with the topic more intensively than ever before in my coffee career. First, it was about understanding exactly what is happening, how we orient ourselves as a coffee roastery, what this means for producers, and how we develop a vision together.
And eventually, I heard more and more that this was all just the work of "the speculators." When the CEO of Lavazza said in the summer of 2025 that 80% of the movement came from hedge funds, I nodded at first, but then became skeptical – and above all, curious. "Speculation" doesn't explain anything at first; it rather fuels emotions.
<blockquote>
<meta charset="utf-8">„Speculation serves many as an explanatory approach when there is a crisis of explanation.<meta charset="utf-8">“
</blockquote>
So I sat down, listened, and asked questions. To people who trade coffee. To people who produce coffee. And to analysts who have been observing commodity markets for decades.
The deeper I went, the clearer it became: there is no simple story. But there are many layers.
<h3 dir="ltr">What is speculation? Of Futures, Shorts, and Longs</h3>
I wanted to understand the mechanics behind coffee price formation and speculation on coffee. So I spoke with Heinz Zimmermann, Professor Emeritus of Financial Market Theory in Basel. He said a sentence that stayed with me throughout:
<blockquote>
„Speculation is not the problem. Excessive speculation is the problem.“
</blockquote>
<div style="text-align: left;"><img src="https://cdn.shopify.com/s/files/1/0406/3343/4269/files/Heinz_Zimmermann_1.jpg?v=1768321059" alt="Heinz Zimmermann profile picture" style="margin-bottom: 16px; float: none;"></div>
<div style="text-align: left;">Heinz Zimmermann</div>
<div style="text-align: left;"> </div>
Because: speculation fulfills a function. It is part of the counterpart to producers who sell futures to hedge their prices against the downside (lower prices).
<h3 dir="ltr">An example:</h3>
If twelve producers want to hedge their harvest and sell futures (a future is a contract that stipulates that someone must buy or sell a certain amount of coffee at a certain price in the future), but only three roasters want to buy, an imbalance arises. Speculators fill this gap. Or as Heinz Zimmermann says: „Producers want to get rid of risk. Speculators take risk.“
When producers hedge a lot (protecting themselves against falling prices) and sell futures, more open positions are created. And these must be bought. These can be so-called commercial actors, i.e., traders or roasters. If they do not buy, speculators take their place. In stock market terms, they now go long, while the producers who are hedging go short.
In order for there to be a balance and for the market to function at all, supply must be covered by demand. And speculators take over these open positions.
<h3 dir="ltr">How do speculators make money?</h3>
The interest of speculators is purely monetary. For them, it is not about the physical product coffee, but about making a financial profit.
This profit occurs when there are changes in the coffee market. Whether prices go up or down is secondary: the profit results from the change in price.
Those who buy at a lower price and sell higher make a profit, as do those who expect falling prices. Then speculators go short, selling a future at a high price that they do not yet own.
If the price falls later, they buy the future back cheaper. Here, too, the difference is the profit.
This movement, or volatility, is the magnet for speculators. But too much volatility is not attractive for them either, Judy Ganes told me.
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<h3 dir="ltr">When speculation becomes too much: excessive speculation</h3>
I wanted to know from Judy Ganes who is actually speculating there. Judy Ganes worked on Wall Street for a long time, has been following commodity markets for decades, and says:
<blockquote>
„Speculators are the scapegoat. Always.“
</blockquote>
<div style="text-align: left;"><img src="https://cdn.shopify.com/s/files/1/0406/3343/4269/files/Judy_Ganes.jpg?v=1768321022" alt="Judy Ganes profile picture" style="margin-bottom: 16px; float: none;"></div>
Judy Ganes
She does not believe in the theory that private investment funds are destroying the market. She says speculators amplify movements, but they don't invent them. Everything begins in the Cash Market, in physical reality.
Excursion: the Cash Market: This is where real, physically available green coffee is traded. In contrast to the futures market, the cash market is about immediate delivery and actual demand today, not in the future.
Judy further explains that speculation can be an amplification of already existing trends. And at the same time, I see through Heinz Zimmermann's lens: amplification is not harmless. Amplification can destroy more than the trigger itself.
If a frost threatens, that is a so-called fundamental factor. But if, as a result, billions flow into the market within minutes because algorithms recognize a correlation, then the market has not just reacted, but overreacted.
Heinz formulates it soberly: „The volatility is higher than what would be fundamentally necessary.“ And that is the point where speculation becomes excessive speculation.
<h2><meta charset="utf-8"> <meta charset="utf-8">How volatility feels at the coffee origin</h2>
<div style="text-align: left;"><img src="https://cdn.shopify.com/s/files/1/0406/3343/4269/files/Cesar_47d36f11-a83d-4180-b1a9-9e0560f9c4a6.jpg?v=1768320994" alt="César Marin manages a farm in Peru" style="float: none;"></div>
<div style="text-align: left;">César Marin</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;"><meta charset="utf-8"> <meta charset="utf-8">
Volatility, the constantly changing state, is to a certain extent interesting for speculators on one hand. Roasteries become cautious when purchasing, because a small price shift can have a large impact on the awarding of a contract for a customer. For producers, on the other hand, volatility is a nerve-wracking ordeal.
The coffee is about to be or has just been harvested. But at what price do I, as a producer, sell the coffee now? Better yet: when do I sell it if the price is constantly changing? And who buys it when?
Many producers were ready to sell coffee in recent months, but buyers did not want to buy. Thus, as César Marin reports in the podcast, producers even had two harvests with them and waited for someone to buy their coffee.
César also says that the coffee price determines whether a producer in Peru can finance his harvest. It decides whether a cooperative loses loyal members or an entire region gets new buyers who show up with cash that no one expected.
<img src="https://cdn.shopify.com/s/files/1/0406/3343/4269/files/Miguel_1.jpg?v=1768320960" alt="Miguel leads Ensambles projects throughout Mexico" style="margin-bottom: 16px; float: none;">
<meta charset="utf-8"> Miguel Guevara
High volatility is difficult for everyone involved in the coffee chain because it does not allow for long-term planning without a lot of risk.
Miguel Guevara from our partners at Ensambles in Mexico assesses the situation for small producers like this:
<blockquote>
„La gente de cereza se la pasa revisando diario la bolsa.“
</blockquote>
Producers who sell coffee in cherries check the New York coffee price every day. “Every day.” Producers who sell their coffee in parchment/pergamino, on the other hand, live in a different timeline. There, prices are adjusted more slowly, and volatility arrives dampened. “But it always arrives.”
<img src="https://cdn.shopify.com/s/files/1/0406/3343/4269/files/Parchment_3dda1933-206f-4e05-bc0e-16e9762db44a.webp?v=1768320923" alt="a hand with parchment" style="margin-bottom: 16px; float: none;">
Excessive speculation and the resulting volatility thus change not only the macro level and the C-Price rapidly, but also the pace at which people on the ground make decisions. Above all, it creates uncertainty: whether producers sell today or tomorrow and whether they remain loyal to a cooperative or not.
And that is a stark contrast:
On one side, we have market participants who make short-term decisions on a screen, the effect of which is felt thousands of kilometers away in coffee-growing countries. What is striking is that a decision on a screen is made quickly, but agriculture is slow. It takes three years before a coffee tree even bears fruit. So two completely different worlds face each other, yet are connected by the coffee market.
<blockquote>
<meta charset="utf-8">„The coffee does not wait”
</blockquote>
One of the sentences that stuck with me on this journey came from producer and friend César Marin from Peru. He said: „El café no espera.“ The coffee does not wait.
When I heard that, I didn't yet know how central this sentence would become. But it suddenly stood as a representative for everything that can happen in the coffee market when prices rise or fall in a very short time.
César told me what it was like in his region around Villa Rica in 2025. The harvest was there, the coffee cherries were ripe, but no one wanted to buy.
„There was coffee,“ he says. „But no one was buying coffee.“ 
Producers had picked and processed coffee, but there were no buyers because the collection points in the region were closed. And so there was this stalemate: the sellers (the producers) wanted to sell coffee because prices were high. The buyers (e.g., the collection points) did not want to buy coffee because the price was too high for them.
At the same time, new buyers suddenly appeared, and no one knew who they represented. Collection points that paid 450 to 470 cts/lb per pound of parchment – these were prices never seen before. César says: „I believe that these were companies from Colombia, Honduras, and Brazil.” Companies, in other words, that could not buy enough coffee from their own markets and therefore came to Peru to cover their demand.
<h2 style="text-align: left;" dir="ltr"><meta charset="utf-8"> <meta charset="utf-8">Why the industry cannot just watch</h2>
I also spoke with people who buy coffee in large quantities: the purchasing manager of a major European retailer, as well as the green coffee buyer from one of the largest roasteries in Europe. When it comes to volumes, the leverage downwards and upwards is greater.
“Volatility can destroy your accounting,” says the purchasing manager.
“If you buy 20,000 tons of coffee and the price fluctuates by twenty or thirty cents in a short time, those are millions.” The green coffee buyer confirms this statement:
<blockquote>
„There are always winners and losers. But the problem is not the price. The problem is the speed.“
</blockquote>
He gave me this example: if competitor A makes a contract for green coffee at 4.25 USD/lb (approx. 9.37 USD/kg) and competitor B buys at 4.10 USD/lb and the other competitor at 4.00 USD/lb (approx. 9.04 USD/kg), then that decides competitiveness and thus the awarding of contracts.
The industry is trying to adapt. Purchasing now sits much more closely with Sales and the Finance department. And the customer themselves is also included in the planning.
The strong fluctuations and high prices have ensured that there is more money in the market than ever before. Traders are also reaching their limits, as in their commercial function they buy coffee first and sell it later. They also borrow the money for this. The amounts of money have increased massively since November 2024. David Neumann also comments on this in this <a href="https://kaffeemacher.podigee.io/77-nkg-ceo-david-neumann#t=1">podcast episode</a>.
<h2 style="text-align: left;" dir="ltr"><meta charset="utf-8"> <meta charset="utf-8">Why speculation is necessary — but remains dangerous at the same time</h2>
After this long journey, I don't stand here and say: speculation is the problem. But I do say: excessive speculation is a problem. And a serious one at that.
Speculation is necessary so that producers can hedge their prices. Without speculators, there would be no functioning futures market. But when capital inflows become too large, when models blindly amplify trends, when liquidity does not stabilize but accelerates, then producers, traders, cooperatives, and also roasters become extras in a market that moves faster than any real decision.
It is often said that the market is always right. I would say: the market always has a result. But whether it is right only becomes clear later.
And this „later“ is often the next harvest.
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