Arabica Coffee Surges on Dollar Weakness and Tight ICE Inventories
- September arabica surged 4.32% on Friday to a 1-week high.
- September robusta eased 0.29% as ICE robusta inventories climbed to a 4.5-month high.
- The dollar index fell to a 7-week low, providing bullish support for coffee prices.
- ICE arabica inventories fell to a 2.5-year low of 244,172 bags on Friday.
- Brazil’s coffee harvest is behind schedule, with Cooxupe at 67.3% vs 74.2% last year.
- No rain fell in Minas Gerais in the week ended August 2.
- USDA forecasts record global production of 189.7 million bags for 2026/27.
Arabica coffee surged sharply higher on Friday. September arabica closed up 13.90 cents, gaining 4.32% to a 1-week high. September robusta closed down 11 points, a decline of 0.29%. Prices settled mixed as diverging inventory trends drove the two markets in opposite directions.
Friday’s decline in the dollar index to a 7-week low provided strong bullish support for coffee prices. A weaker dollar makes dollar-denominated commodities more attractive to foreign buyers. Additionally, arabica supplies continue to tighten as ICE-monitored inventories fell to a 2.5-year low.
Dollar Weakness and Inventory Trends
The dollar index ($DXY) fell to a 7-week low on Friday. This is bullish for coffee prices. A weaker dollar boosts demand from international buyers. It also supports higher prices across commodity markets.
Arabica coffee supplies continue to tighten. ICE-monitored arabica inventories fell to a 2.5-year low of 244,172 bags on Friday. This tight supply situation provides strong support for arabica prices. In contrast, robusta inventories climbed to a 4.5-month high of 4,261 lots on Friday. This has weighed on robusta prices.
| Category | Latest Level | Status |
|---|---|---|
| Arabica inventories | 244,172 bags | 2.5-year low |
| Robusta inventories | 4,261 lots | 4.5-month high |
Brazil Harvest Delays
Arabica prices have support from the slow pace of Brazil’s coffee harvest. The harvest among members of Cooxupe co-op was 67.3% complete as of July 31. This is behind the year-earlier pace of 74.2%. On July 17, Safras & Mercado reported Brazil’s 2026/27 coffee harvest was 64% complete as of July 15. This compares with 77% at the same time last year. The five-year average stands at 70%.
On Monday, Somar Meteorologia reported that no rain fell in the week ended August 2 in Brazil’s Minas Gerais. This is the country’s main arabica-growing region. Dry conditions may help the harvest pace improve.
| Indicator | Value |
|---|---|
| Cooxupe harvest (as of July 31) | 67.3% |
| Cooxupe year-earlier pace | 74.2% |
| Brazil overall (as of July 15) | 64% |
| Previous year (July 15) | 77% |
| Five-year average (July 15) | 70% |
| Rainfall in Minas Gerais (week ended Aug 2) | 0 mm |
USDA Forecast: Record Production
The latest USDA biannual forecast was bearish for coffee prices. On July 22, the USDA forecast that global coffee output in the 2026/27 season will rise by 6.0% to a record 189.7 million bags. The increase is mainly due to improved growing conditions in Brazil. The USDA expects global arabica production to rise 12% year-on-year. However, robusta production is expected to fall by 0.7%. World ending stocks are expected to rise by 1.9 million bags to 26.3 million bags.
El Niño Concerns Support Prices
Concerns about an El Niño weather pattern are bullish for prices. Coffee trader Commercial warned that El Niño may delay rains in Brazil. This September and October is when tree flowering normally occurs. Any delay could hurt Brazil’s 2026/27 coffee crop. On July 8, the US Climate Prediction Center issued a warning. The El Niño 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 possible floods, droughts, and temperature fluctuations later this year. These conditions could hinder coffee production in Asia and South America.
Vietnam Exports Continue to Surge
Soaring coffee exports from Vietnam are bearish for robusta prices. On Sunday, Vietnam’s National Statistics Office reported Vietnam’s 2026 coffee exports from January to July rose 21.1% year-on-year to 1.31 million metric tons. Vietnam’s 2025 coffee exports jumped 17.5% to 1.58 million metric tons. Production for 2025/26 is projected to climb 6% to a four-year high of 1.76 million metric tons (29.4 million bags).
Frequently Asked Questions
Why did arabica coffee surge on Friday?Arabica surged 4.32% as the dollar index fell to a 7-week low and ICE inventories hit a 2.5-year low.
What happened to robusta coffee prices?September robusta eased 0.29% as ICE robusta inventories climbed to a 4.5-month high of 4,261 lots.
What is the dollar index level?The dollar index fell to a 7-week low on Friday, providing bullish support for coffee prices.
What is the status of Brazil’s coffee harvest?Brazil’s harvest is 67.3% complete through Cooxupe, behind last year’s 74.2% pace.
What does the USDA forecast say?USDA forecasts record global production of 189.7 million bags for 2026/27, up 6% from the previous year.
How does El Niño affect coffee prices?El Niño could delay rainfall during Brazil’s critical flowering period in September-October, potentially reducing crop yields and supporting prices.
