Argentine farmers are hoarding millions of tons of beans gambling global prices will climb even higher. Vietnamese coffee farmers are also hoarding beans in anticipation of higher prices. In Ethiopia, the government is accusing coffee growers of hoarding the produce and threatening the hoarders with an export ban.

“This not only robs the country of hard currency earnings it was supposed to obtain from the sales but has also tarnished the nation’s image and diminished the confidence of foreign buyers,” Ethiopia’s state minister wrote in the letter.

Speculation in commodities and particularly in coffee looks to have spilled out of the futures floor and moved into every farm.

A dealer at an international trading house in Ho Chi Minh City says:

“Farmers are waiting for high prices, but maybe in July and August, they will sell more beans because they need the money to pay for children’s schooling.”

Another dealer in Ho Chi Minh City adds:

“There is a buying demand while selling is very little… We do not know now what prices farmers are expecting as they seem to wait for a higher price, and when that price is reached, they say they will wait for more.”

As the global coffee stocks started rapidly to deplete, circa 2004, coffee prices have spiked, but it is the action since 2010 that sent the coffee prices sky high.

From 2009 to 2010 world coffee stocks dropped over 25% precipitating a non-linear 100% rise in price.

The increase in price speculation and deliberate hoarding in anticipation of even greater price spikes may signal that the partiers in the coffee markets may be developing a hangover.

Coffee futures chart also signals exhaustion in the price momentum with very little price support down to $120.

Any favorable resolution with the frost threat in Brazil and Indonesia’s wet weather may convince the coffee hoarders that they should take any price before someone else does.

Bottom line, risk-reward ratio favors not initiating any long bets on coffee prices.