Coffee is hot, it's percolating--well, you get the idea. Coffee-futures prices--now hovering at a mere 56 a pound--are at a 20-year low, and small commodities players believe that the time has come to bet on the bean. Trading in coffee futures on New York's Coffee, Sugar & Cocoa Exchange has exploded to record levels, as investors wager that prices have finally bottomed out.

But if you're thinking of joining the speculative frenzy, grab a doughnut, a cup of coffee--and think about something else. Wall Street coffee mavens agree that buying into futures right now, in the belief that a trough has been reached, is a sure way of getting scalded. "Sure, the market looks cheap. It also looked cheap at 75 ," says Judith Gaines, a Merrill Lynch coffee-futures analyst.

MORE DREGS. There's a technical term for "cheap stuff tends to get cheaper": the Gann Theory. It holds that when contracts are at new lows, there is a greater probability of making money by selling than by buying. Indeed, investment pros have been making money in coffee for most of the past three years because prices have steadily declined.

Technical factors such as the Gann Theory tend to carry the day in the commodities markets. But there are also plenty of fundamental reasons to steer clear of coffee. Analysts note that coffee-company inventories are filled to the brim, so roasters are not inclined to buy up more coffee for their stocks (particularly when the prices keep going down). Coffee exports have also been bountiful: currently about 72 million bags a year, each bag weighing 132 pounds. Coffee-growers want to see exports cut to 62 million bags, but efforts by the coffee-producing and coffee-consuming nations to reach an accord that would lower production are getting nowhere. The International Coffee Organization, which represents 72 nations, adjourned its meeting in London on June 26 without making much headway toward an agreement on exports.

The last international coffee accord expired in 1989, and the latest talks didn't exactly overflow with success. The only agreement was to meet again on July 29. Even if a coffee pact is hammered out, it would have to be ratified by both the producers and consumers.

And Congress is unlikely to okay coffee quotas the producers want but American roasters oppose. Notes Gaines: "There's more chance of a frost in Brazil than there is for an agreement.' So if you want to speculate in coffee, go ahead--but pray for bad weather

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