Brazil Coffee Harvest Hit by Heavy Rains as Prices Surge to Two-Week High

July arabica coffee (KCN26) jumped 4.40 cents (+1.63%), while July ICE robusta coffee (RMN26) climbed 82 cents (+2.36%) on Thursday, pushing both contracts to two-week highs.

The rally in coffee prices reflects ongoing supply concerns stemming from heavy rains in Brazil that are delaying the harvest and threatening tighter global inventories.

ICE coffee inventories have declined over the past two months, supporting price gains. Arabica stockpiles fell to a 3.25-month low of 440,785 bags, while robusta inventories dropped to a two-year low of 3,631 lots before rebounding to 3,968 lots last Friday.

Weather risks globally are bolstering sentiment for coffee. In Vietnam, excessive dryness in the Central Highlands—the country’s primary robusta region—has raised concerns about yield potential. Forecaster Vaisala noted spotty rainfall and warned more precipitation is needed to support cherry development.

Concerns surrounding the El Niño weather pattern may further strain Brazilian crops in 2026/27. Commercial said El Niño could delay seasonal rains in Brazil during September and October, when flowering occurs—potentially impacting the 2026/27 harvest. NOAA estimates an 82% probability of El Niño emerging by May–July and persisting through year-end, with a 67% chance of a “Super El Niño.”

Lower Brazilian exports are adding upward pressure. April green coffee exports fell 1.3% year-over-year to 2.76 million bags, according to Cecafe.

Over the past month, arabica futures slid to a 1.5-year low amid expectations of improved supply conditions. However, recent forecasts suggest rising production. The Coffee Trading Academy projects Brazil’s 2026/27 harvest at 71.4 million bags (+12% y/y), while Marex Group Plc estimates a record 75.9 million bags. Still, StoneX increased its Brazil output forecast to 75.3 million bags—up from 70.7 million—and expects a global surplus of 10 million bags in 2026, the largest in six years.

Vietnam’s robusta exports remain a pricing headwind. January–April shipments rose 15.8% y/y to 810,000 metric tons, with full-year 2025 exports climbing 17.5% to 1.58 million metric tons. Output for 2025/26 is forecast at 1.76 million metric tons, a four-year peak.

The ongoing Hormuz Strait closure continues to tighten global coffee supplies, driving up shipping costs and bolstering prices.

Bearish factors include the International Coffee Organization’s report that global exports for the October–September marketing year slipped 0.3% to 138.658 million bags.

Meanwhile, the USDA’s Foreign Agricultural Service projects 2025/26 world production at a record 178.848 million bags (+2.0% y/y), with arabica output down 4.7% and robusta up 10.9%. Brazil’s production is expected to fall 3.1% to 63 million bags, while Vietnam’s rises 6.2% to 30.8 million.

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