Coffee Lovers, Take Note: Lavazza Sounds Alarm, Suggest It May Be Time To Stock Up

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Coffee Lovers, Take Note: Lavazza Sounds Alarm, Suggest It May Be Time To Stock Up

by Tyler Durden

Authored...

Following the largest daily surge in Arabica coffee futures since the Dot-Com bubble, the head of Italian coffee giant Lavazza Group warned that prices are unlikely to fall over the next two years.

Giuseppe Lavazza, chairman of the Italian roaster, was quoted by Bloomberg as saying, "The market needs to have stability before it's time to think about a reduction of prices."

Lavazza explained that it will take two harvests and a massive rebuilding phase to replenish inventories and ease supply constraints, making lower prices unlikely over the next two years.

On Monday, Arabica futures in New York posted their biggest jump in 26 years, as worsening weather in Brazil and shrinking exchange-managed stockpiles fueled a rally. The violent move higher was not just weather-driven. A big short squeeze also materialized.

That sent 60-day volatility to the highest since 2014 levels - a period where weather-driven supply shock in Brazil dented global supplies. 

Making matters worse is the El Niño weather phenomenon that will start emerging in the months ahead and will create adverse weather conditions not just for top-grower Brazil but for other agri belts around the world.

"I think we are living in a long-lasting period of instability and uncertainty," Lavazza warned, adding, "Instability is the new constant."

Lavazza noted, "We need a couple of very strong crops from Brazil and Vietnam to rebuild stability. So maybe the first good crop is arriving," but we don't yet have evidence it will be as good as was expected at the end of 2025. 

He added: "The coffee market now shows fundamental changes compared to the past. We are living in an environment we don't know very well."

The takeaway for coffee lovers is simple: stock up.

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