Coffee Prices Climb on Unexpected Rain Forecasts for Brazil
- September arabica rose 0.91% and robusta gained 1.64% on Wednesday.
- Unexpected rain forecast for Minas Gerais triggered short covering.
- No rain fell in Minas Gerais in the week ended August 2.
- Brazil’s harvest is 58.3% complete, behind last year’s 67% pace.
- ICE arabica inventories fell to a 2.5-year low of 260,720 bags.
- USDA forecasts record global production of 189.7 million bags.
- Vietnam coffee exports (Jan-Jul) rose 21.1% year-on-year.
Coffee prices moved higher today. Short covering emerged after an unexpected chance of rain was forecast for Minas Gerais. Minas Gerais is Brazil’s largest coffee-growing region. Rain could further delay the country’s coffee harvest.
On Monday, coffee prices sold off sharply. Forecasts for drier conditions in Brazil’s coffee-growing regions had bolstered the outlook for the harvest pace to pick up. Somar Meteorologia reported no rain fell in Minas Gerais in the week ended August 2.
Harvest Progress Behind Schedule
The slow pace of Brazil’s coffee harvest is supportive of coffee prices. The harvest among members of Cooxupe co-op was 58.3% complete as of July 24. This is behind the year-earlier pace of 67%. 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%.
| Indicator | Value |
|---|---|
| Cooxupe harvest (as of July 24) | 58.3% |
| Cooxupe year-earlier pace | 67% |
| 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 |
Inventory Trends: Arabica Low, Robusta High
Rising inventories are weighing on robusta coffee. ICE robusta inventories climbed to a 4.25-month high of 4,254 lots on July 22. They were mildly below that level at 4,207 lots today. By contrast, a bullish factor for arabica coffee prices was that ICE arabica inventories fell to a 2.5-year low of 260,720 bags on Monday.
| Category | Latest Level | Status |
|---|---|---|
| Arabica inventories | 260,720 bags | 2.5-year low |
| Robusta inventories (July 22) | 4,254 lots | 4.25-month high |
| Robusta inventories (current) | 4,207 lots | Mildly below high |
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. On June 3, the USDA’s Foreign Agricultural Service forecast a record Brazil coffee crop of 71.9 million bags for 2026/27, up 14% year-on-year.
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).
