Brazilian Weather Concerns Drive Sharp Rebound in Coffee Prices

December arabica coffee (KCZ26) closed up 11.00 points (+3.95%), while November ICE robusta coffee (RMX26) rose by 47 points (+1.40%). Coffee prices surged sharply today, with arabica reaching a two-week high and robusta posting a one-week high. Concerns over dry conditions in Brazil threatening the crucial flowering stage of the country’s 2026/27 coffee crop triggered fund short-covering. Climatempo meteorologists noted that rainfall chances in Minas Gerais, Brazil’s largest arabica coffee-producing region, remain limited over the next week.

Before this sharp rebound, coffee prices had faced sustained pressure over the past month, dipping to a 3.25-month low last Wednesday due to expectations of ample global supplies. On September 10, the International Coffee Organization (ICO) projected a record global crop and a market surplus. The ICO reported that 2025/26 global coffee production rose by 4.4% year-over-year to a record 183.6 million bags, while consumption fell by 0.9% year-over-year to 180.6 million bags, leaving a 3 million bag surplus—the first surplus in five years.

Last Thursday, Conab, Brazil’s crop forecasting agency, raised its estimate for the 2026 coffee crop to 67.6 million bags, up from the previous estimate of 66.7 million bags. Brazil’s 2026 arabica production is expected to increase by 34.8% year-over-year to 48.21 million bags, while robusta production is projected to decline by 6.6% year-over-year to 19.39 million bags.

Favorable growing conditions in Brazil and Vietnam have generally been bearish for coffee prices. Above-normal rainfall in Brazil during the critical flowering stage could benefit the 2026/27 harvest. Somar Meteorologia reported that 29.7 mm of rain, or 112% of the historical average, fell in Minas Gerais during the week ending September 27. In Vietnam, forecaster Vaisala stated that recent abundant rains have improved soil moisture levels and should support cherry development in the Central Highlands, the country’s largest coffee-producing region.

Brazil’s coffee exports are surging onto global markets as the harvest wraps up, further adding to supplies and undercutting prices. On September 10, Cecafe reported that Brazil’s total coffee exports in August rose by 31% year-over-year to 4.155 million bags, a record high for the month. August arabica exports climbed by 26% to 2.87 million bags, while robusta exports jumped by 54% to 953,592 bags. Separately, Brazil’s Trade Ministry reported on September 8 that August coffee exports rose by 44.6% year-over-year to 206,618 metric tons, the highest volume in eight months.

Similarly, signs of larger supplies from Vietnam, the world’s leading robusta producer, are weighing on robusta prices. On September 2, Vietnam’s National Statistics Office reported that 2026 coffee exports (January through August) rose by 13.7% year-over-year to 1.33 million metric tons. Vietnam’s 2025 coffee exports increased by 17.5% year-over-year to 1.58 million metric tons. Additionally, the country’s 2025/26 coffee production is projected to climb by 6% year-over-year to a four-year high of 1.76 million metric tons (29.4 million bags).

Tight inventories offer support to arabica prices, while rising stocks weigh on robusta. ICE arabica coffee inventories fell to a 27-year low of 217,646 bags on September 15, before recovering to a 1.5-month high of 254,304 bags last Friday. In contrast, ICE robusta inventories climbed to a 10-month high of 5,398 lots last Thursday, bearish for robusta prices.

Looking ahead, weather patterns remain a critical wildcard. Concerns that an El Niño weather pattern could damage Brazil’s coffee crop next year are bullish for prices. Coffee trader Commercial noted that El Niño may delay rains in Brazil during September and October, when tree flowering normally occurs, potentially hurting the 2026/27 crop. On July 8, the US Climate Prediction Center stated that the El Niño pattern that emerged across the equatorial Pacific was likely to be one of the strongest in more than 75 years, setting the stage for months of possible floods, droughts, and temperature fluctuations that could hinder production in Asia and South America.

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 would rise by 6.0% (10.8 million bags) to a record 189.7 million bags, driven largely by improved growing conditions in Brazil. The USDA expects global arabica production to rise by 12% year-over-year, while robusta production is expected to fall by 0.7% year-over-year. World ending stocks are projected to increase by 1.9 million bags to 26.3 million bags. On June 3, the USDA’s Foreign Agricultural Service (FAS) forecast a record 2026/27 Brazil coffee crop of 71.9 million bags, up 14% year-over-year.

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