September arabica coffee (KCU26) today is down -7.65 (-2.38%), and September ICE robusta coffee (RMU26) is down -62 (-1.62%).
Coffee prices are retreating today, with robusta falling to a 2-week low. Coffee prices are under pressure on the outlook for dry conditions in Brazil’s coffee-growing regions over the next week, which should accelerate the coffee harvest. Rising inventories are also weighing on robusta coffee after ICE robusta inventories climbed to a 4-month high today.
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On July 6, arabica coffee soared to a 5.75-month high, and on July 7, robusta coffee also rose to a 5.75-month high amid a delayed coffee harvest in Brazil. However, since posting a 5.75-month high earlier this month, coffee prices have whipsawed in a wide range below those highs amid illiquid trading conditions, leading to volatile price moves. Price volatility in coffee markets is exacerbated by illiquid trading conditions. After Intercontinental Exchange (ICE) recently raised margin requirements for coffee futures trading, liquidity has dried up, prompting many commodity funds to close their positions and leading to excessive one-way price moves.
The slow pace of Brazil’s coffee harvest is supportive of prices. Last Friday, Safras & Mercado reported that Brazil’s 2026/27 coffee harvest is 64% complete as of July 15, behind last year’s comparable level of 77% and the five-year average of 70%.
Coffee prices have moved sharply higher over the past month as heavy rains in Brazil have disrupted fieldwork and may have lowered coffee crop quality. Also, Brazilian coffee farmers are holding back on sales, hoping prices will rise and bracing for the potential impact of this year’s El Niño weather event.
ICE coffee inventories have trended lower over the past three months, which is also supportive of coffee prices. ICE arabica coffee inventories fell to a 2.25-year low of 328,759 bags on Tuesday. Meanwhile, ICE robusta inventories fell to a 2-year low of 3,631 lots on May 15 but have since risen to a 4-month high of 4,254 lots today.
Recent strength in Brazil’s coffee exports is negative for coffee prices. Last Wednesday, Cecafe reported that Brazil’s Jun green coffee exports jumped +14.4% y/y to 2.64 million bags.
Concerns that an El Niño weather pattern could hurt Brazil’s coffee crop next year are bullish for prices. Coffee trader Commercial said the El Niño weather pattern may delay rains in Brazil this September and October, when tree flowering normally occurs, hurting Brazil’s 2026/27 coffee crop.
On July 8, the US Climate Prediction Center said the El Niño weather pattern that emerged across the equatorial Pacific last month will likely be one of the strongest in more than 75 years. This sets the stage for months of possible floods, droughts, and temperature fluctuations later this year that could hinder coffee production in Asia and South America.
Somar Meteorologia reported on Monday that 0.2 mm of rain, or 20% of the historical average, fell in the past week in Minas Gerais, Brazil’s biggest coffee-growing region, in the week through July 19.
On June 9, arabica coffee fell to a 20.5-month nearest-futures low, and robusta slid to a 3.5-month low, amid an outlook for a bumper coffee crop in Brazil this year. On June 3, the USDA’s Foreign Agricultural Service (FAS) forecast a record 2026/27 Brazil coffee crop of 71.9 million bags, up +14% y/y. Also, Rabobank raised its 2026/27 global arabica coffee surplus estimate to 9.5 million bags from 7.0 million bags previously.
Soaring coffee exports from Vietnam, the world’s largest robusta producer, are bearish for robusta prices. On July 3, Vietnam’s National Statistics Office reported that Vietnam’s 2026 coffee exports (Jan-Jun) rose by +7.3% y/y to 1.05 MMT. Vietnam’s 2025 coffee exports jumped by +17.5% y/y to 1.58 MMT. Also, Vietnam’s 2025/26 coffee production is projected to climb +6% y/y to a 4-year high of 1.76 MMT (29.4 million bags).
As a bearish factor, the International Coffee Organization (ICO) reported on November 7 that global coffee exports for the current marketing year (Oct-Sep) fell -0.3% y/y to 138.658 million bags.
The USDA’s Foreign Agriculture Service (FAS) bi-annual report on December 18 projected that world coffee production in 2025/26 will increase by +2.0% y/y to a record 178.848 million bags, with a -4.7% decrease in arabica production to 95.515 million bags and a +10.9% increase in robusta production to 83.333 million bags. FAS forecasted that Brazil’s 2025/26 coffee production will decline by -3.1% y/y to 63 million bags and that Vietnam’s 2025/26 coffee output will rise by 6.2% y/y to a 4-year high of 30.8 million bags. FAS forecasts that 2025/26 ending stocks will fall by -5.4% to 20.148 million bags from 21.307 million bags in 2024/25.
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