September arabica coffee (KCU26) today is up +30.75 (+9.93%), and September ICE robusta coffee (RMU26) is up +253 (+6.76%).
Coffee prices are sharply higher today, continuing the volatile price swings seen this week. After Intercontinental Exchange raised margin requirements for coffee futures trading earlier this week, liquidity has dried up, prompting many commodity funds to close their positions and leading to excessive one-way price moves.
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On Monday, arabica coffee soared to a 5.5-month high, and on Tuesday, robusta posted a 5-month high amid a delayed coffee harvest in Brazil. Safras & Mercado reported on Monday that Brazil’s 2026/27 coffee harvest is 52% complete as of July 1, behind last year’s comparable level of 60% and the five-year average of 55%.
Coffee prices are also supported after meteorologist Rural Clima said on Monday that rain is forecast for much of Brazil in the middle of July, which could be “detrimental” to crops, including coffee.
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 354,261 bags on Wednesday. Meanwhile, ICE robusta inventories fell to a 2-year low of 3,631 lots on May 15 but have since risen to a 3.5-month high of 4,183 lots on Tuesday.
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.
The US National Oceanic and Atmospheric Administration (NOAA) estimates a 67% probability of a “Super El Niño” this year that could be the strongest on record. On June 10, the Japan Meteorological Agency confirmed an El Niño weather pattern had formed across the equatorial Pacific. 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 no rain fell in Minas Gerais, Brazil’s biggest coffee-growing region, in the week through July 5.
On June 9, arabica coffee fell to a 19.25-month nearest-futures low, and robusta slid to a 2.25-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. Meanwhile, Cecafe reported on June 11 that Brazil’s May green coffee exports rose +4.2% y/y to 2.73 million bags.
Soaring coffee exports from Vietnam, the world’s largest robusta producer, are bearish for robusta prices. Last Friday, 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.
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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