July arabica coffee (KCN26) today is up +5.40 (+2.17%), and July ICE robusta coffee (RMN26) is up +107 (+3.19%).
Coffee prices rallied sharply to 1-week highs today on concern that persistent rain in Brazil will delay the coffee harvest. Forecaster Vaisala said moderate to heavy rainfall is forecast across Brazil’s coffee-growing regions this week, and the showers could extend into next week.
ICE coffee inventories have trended lower over the past 2.5 months, which is supportive of coffee prices. ICE arabica coffee inventories fell to a 6.5-month low of 402,709 bags on Wednesday. Meanwhile, ICE robusta inventories fell to a 2-year low of 3,631 lots on May 15 but are now mildly above that low today at 3,713 lots.
Concerns that an El Niño weather pattern could hurt Brazil’s coffee crop next year are supportive 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 an 67% probability of a “Super El Niño” this year that could be the strongest on record. On Wednesday, the Japan Meteorological Agency confirmed an El Niño weather pattern had formed across the equatorial Pacific. This sets the stage for months of floods, droughts, and temperature fluctuations later this year that could hinder coffee production in Asia and South America.
On Tuesday, arabica coffee fell to a 19-month nearest-futures low, and robusta slid to a 2-month low, amid an outlook for a bumper coffee crop this year in Brazil.
Last Wednesday, 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.
Coffee prices have ratcheted lower over the past six weeks amid an improved global supply outlook. On May 7, the Coffee Trading Academy projected Brazil’s 2026/27 coffee harvest would increase by 12% y/y to 71.4 million bags. On March 19, Marex Group Plc projected a record 2026/27 Brazilian coffee crop of 75.9 million bags, surpassing Sucafina’s forecast of 75.4 million bags (+15.5% y/y). On March 12, StoneX raised its Brazil 2026/27 coffee production estimate to a record 75.3 million bags, up from a November estimate of 70.7 million bags. Meanwhile, StoneX projected the 2026 global coffee surplus will expand to 10 million bags from 1.8 million bags in 2025, the biggest surplus in 6 years.
Soaring coffee exports from Vietnam, the world’s largest robusta producer, are bearish for robusta prices. Last Tuesday, Vietnam’s National Statistics Office reported that Vietnam’s 2026 coffee exports (Jan-May) rose by +7.9% y/y to 922,000 MT. 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).
Smaller exports from Brazil are supportive of coffee prices. On May 12, Cecafe reported that Brazil’s April green coffee exports fell -1.3% y/y to 2.76 million bags.
The ongoing closure of the Strait of Hormuz has disrupted global coffee supplies and is bullish for prices. The closure of the Strait has tightened coffee supplies by increasing global shipping rates, insurance, fertilizer, and fuel costs, and raising costs for coffee importers and roasters.
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.
