Coffee Prices Jump on Slow Brazil Harvest
- September arabica rose 2.46% and robusta gained 2.11% on Friday.
- Brazil’s 2026/27 harvest is only 64% complete, behind last year’s 77% and the 70% average.
- ICE raised margin requirements twice last week, reducing liquidity and amplifying volatility.
- Heavy rains in Brazil have disrupted fieldwork and may have lowered crop quality.
- ICE arabica inventories fell to a 2.25-year low of 332,945 bags.
- El Niño concerns continue to support prices with potential impacts on Brazil’s flowering.
- Brazil’s June green coffee exports jumped 14.4% year-on-year to 2.64 million bags.
Coffee prices settled sharply higher on Friday. September arabica closed up 7.70 cents, gaining 2.46%. September robusta closed up 80 points, a rise of 2.11%. The rally came amid delays in Brazil’s coffee harvest.
Safras & Mercado reported the harvest is 64% complete as of July 15. This compares with 77% at the same time last year. The five-year average stands at 70%. The slow pace continues to support prices.
Harvest Delays Drive Coffee Prices Higher
Brazil’s 2026/27 coffee harvest is progressing slowly. Heavy rains have disrupted fieldwork. These rains may have also lowered crop quality. Brazilian farmers are holding back on sales. They hope prices will rise further. They are also bracing for potential El Niño impacts.
Last Monday, arabica soared to a 5.5-month high. Last Tuesday, robusta also hit a 5.5-month high. However, prices have since whipsawed in a wide range. Trading conditions remain illiquid. This has led to volatile price moves.
| Period | Completion |
|---|---|
| Current year (2026/27) | 64% |
| Previous year (2025/26) | 77% |
| Five-year average | 70% |
Margin Hikes Reduce Liquidity
ICE raised margin requirements for coffee futures twice last week. This action has dried up liquidity. Many commodity funds have closed their positions. The result has been excessive one-way price moves. Volatility has been amplified by the illiquid conditions.
This has created a challenging trading environment. Prices have moved sharply in both directions. Market participants should expect continued volatility in the near term.
Inventory Trends Support Coffee Prices
ICE coffee inventories have trended lower over the past three months. This is supportive for coffee prices. ICE arabica inventories fell to a 2.25-year low of 332,945 bags on Friday. Meanwhile, ICE robusta inventories fell to a 2-year low on May 15. However, they have since risen to a 3.5-month high of 4,220 lots.
| Category | Latest Level | Status |
|---|---|---|
| Arabica inventories | 332,945 bags | 2.25-year low |
| Robusta inventories (May 15) | 3,631 lots | 2-year low |
| Robusta inventories (current) | 4,220 lots | 3.5-month high |
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.
Last Wednesday, 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. These conditions could hinder coffee production in Asia and South America.
Somar Meteorologia reported no rain fell in Minas Gerais in the week through July 5. This is Brazil’s biggest coffee-growing region. The dry conditions add to market concerns.
Bearish Factors to Consider
Despite the bullish momentum, several bearish factors exist. Recent strength in Brazil’s coffee exports is negative for prices. On Thursday, Cecafe reported Brazil’s June green coffee exports jumped 14.4% year-on-year to 2.64 million bags.
Fund positioning also poses risks. Last Friday’s COT data showed funds boosted their long positions in robusta by 5,607 contracts in the week ended July 7. This brought net-long positions to 44,195, the most in more than two years. Such concentrated long positions can accelerate price declines if investors begin to unwind.
Vietnam’s soaring coffee exports are also bearish for robusta prices. On July 3, Vietnam’s National Statistics Office reported coffee exports from January to June rose 7.3% year-on-year to 1.05 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.
The USDA’s Foreign Agriculture Service projected record global production. World coffee production in 2025/26 is forecast to increase 2% to a record 178.848 million bags. Arabica production is expected to decline 4.7% to 95.515 million bags. Robusta production is projected to rise 10.9% to 83.333 million bags.
| Category | Forecast | Change |
|---|---|---|
| World coffee production 2025/26 | 178.848 million bags | +2.0% |
| Arabica production | 95.515 million bags | -4.7% |
| Robusta production | 83.333 million bags | +10.9% |
| Brazil 2025/26 production | 63 million bags | -3.1% |
| Vietnam 2025/26 output | 30.8 million bags | +6.2% |
| Ending stocks 2025/26 | 20.148 million bags | -5.4% |
Technical Perspective
On June 9, arabica coffee fell to a 20.25-month nearest-futures low. Robusta slid to a 3.25-month low. This occurred amid an outlook for a bumper coffee crop in Brazil. However, prices have since recovered significantly. The market remains highly volatile with significant upside potential.
