Coffee futures close to record highs as speculators bet on reduced supply of Brazilian crops.

Coffee futures are hovering near historic highs, with market speculators betting that tariffs and drought will lead to a decrease in supply from Brazil, the world's largest coffee producer. In the New York market on Tuesday, the most active Arabica coffee contract reached $4.24 per pound, slightly below the historic high of $4.2995 reached in February. Since early August, futures prices have risen by about 50%, primarily driven by concerns in the market that Brazilian supply may not be enough to fully replenish shrinking inventories. Trading firm I & M Smith Ltd. reported that with low trading volume, speculators pushing prices above $4 triggered more buying interest, leading to further price increases due to a lack of selling pressure.