July Arabica Coffee (KCN26) closed up +3.25 (+1.28%) on Friday, and July ICE Robusta Coffee (RMN26) closed up +131 (+3.78%).
Coffee prices on Friday extended Thursday’s gains amid concerns that persistent rains in Brazil could delay the coffee harvest. Moderate to heavy rainfall is expected in Brazil’s coffee-growing regions this week, and the rainfall could continue into next week, forecaster Vaisala said.
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Coffee prices are also being supported by expectations of strong demand for coffee after news that the University of Michigan’s US Consumer Sentiment Index rose by +4.1 to 48.9 in June, stronger than expected to rise to 46.0.
ICE coffee inventories have declined over the past three months, which is supportive of coffee prices. ICE Arabica coffee inventories fell to a 6.75-month low of 398,940 bags on Friday. Meanwhile, ICE robusta inventories fell to a two-year low of 3,631 lots on May 15 and stood at 3,761 lots, slightly above that level on Friday.
Concerns that the El Nino weather pattern could damage Brazil’s coffee crop next year are supportive of prices. El Nino weather patterns could delay rains in Brazil this September and October, when trees normally flower, causing damage to Brazil’s 2026/27 coffee crop, coffee trader Commercial said.
The US National Oceanic and Atmospheric Administration (NOAA) estimates there is a 67% chance of a “Super El Niño” this year that could be the strongest on record. On Wednesday, the Japan Meteorological Agency confirmed that an El Nino weather pattern has formed in the equatorial Pacific. This sets the stage for months of flooding, drought and temperature fluctuations later this year that could hamper coffee production in Asia and South America.
Arabica coffee futures fell to a 19-month near-term low on Tuesday, and robusta fell to a 2-month low amid the prospect of a bumper coffee crop in Brazil this year. Last Wednesday, USDA’s Foreign Agricultural Service (FAS) projected a record 2026/27 Brazil coffee crop of 71.9 million bags, up +14% year-over-year. Additionally, Rabobank raised its 2026/27 global Arabica coffee surplus forecast to 9.5 million bags from 7.0 million bags previously.
Rising coffee exports from Vietnam, the world’s largest robusta producer, are pushing down robusta prices. Last Tuesday, Vietnam’s National Statistics Office reported that Vietnam’s 2026 coffee exports (January-May) increased +7.9% year on year to 922,000 metric tons. Vietnam’s 2025 coffee exports to reach 1.58 MMT, up +17.5% year-on-year. Additionally, Vietnam’s 2025/26 coffee production is projected to grow +6% annually to reach a 4-year high of 1.76 MMT (29.4 million bags).
The closure of the Strait of Hormuz has disrupted global coffee supplies and sent prices soaring. The closure of the strait has reduced the supply of coffee, increasing global shipping rates, insurance, fertilizer and fuel costs and increasing 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 (October-September) fell -0.3% to 138.658 million bags.
The USDA’s Foreign Agricultural Service (FAS) bi-annual report on December 18 projected world coffee production in 2025/26 to increase by +2.0% to a record 178.848 million bags, with Arabica production decreasing by -4.7% to 95.515 million bags and Robusta production increasing by +10.9% to 83.333 million bags. FAS forecasts Brazil’s 2025/26 coffee production to decline -3.1% year-on-year to 63 million bags and Vietnam’s 2025/26 coffee production to increase 6.2% year-on-year to a 4-year high of 30.8 million bags. The FAS estimates 2025/26 ending stocks will fall -5.4% to 20.148 million bags in 2024/25 from 21.307 million bags.
On the date of publication, Rich Asplund did not have (directly or indirectly) any positions in any securities mentioned in this article. All information and data in this article is for informational purposes only. Please see the Barchart Disclosure Policy here for more information.
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