September arabica coffee futures (KCU26) rose 2.46% on Friday, closing at +7.70, while September ICE robusta coffee (RMU26) climbed 2.11% to +80, driven by delays in Brazil’s coffee harvest. According to Safras & Mercado, Brazil’s 2026/27 coffee harvest is 64% complete as of July 15, lagging behind last year’s 77% and the five-year average of 70%.
Arabica coffee reached a 5.5-month high last Monday, followed by robusta hitting a similar peak on Tuesday, as concerns over the delayed harvest intensified. However, prices have since fluctuated within a broad range amid reduced market liquidity. Elevated margin requirements imposed by the Intercontinental Exchange (ICE) have further tightened trading conditions, forcing commodity funds to liquidate positions and amplifying price swings. Additionally, heavy rains in Brazil have disrupted field operations and may have compromised crop quality, while farmers are deferring sales in anticipation of higher prices amid El Niño-related weather uncertainties.
ICE arabica coffee inventories fell to a 2.25-year low of 332,945 bags on Friday, bolstering price support. Meanwhile, ICE robusta stocks declined to a 2-year low of 3,631 lots in May but rebounded to a 3.5-month high of 4,220 lots by Monday. Brazil’s robusta exports rose 14.4% year-over-year in June to 2.64 million bags, though this could exert downward pressure on prices. Funds hold record long positions in ICE robusta, with net-long holdings reaching 44,195 contracts in the week ending July 7—a level not seen in over two years.
El Niño-related risks are a key bullish driver. The U.S. Climate Prediction Center projects a strong El Niño, potentially delaying critical rainfall during Brazil’s September-October flowering season. This could impair the 2026/27 crop, with Somar Meteorologia noting no rain in Minas Gerais, Brazil’s top coffee region, during the week ending July 5. Conversely, Vietnam’s robusta exports surged 7.3% to 1.05 MMT in the first half of 2026, with production forecast to hit a four-year high of 1.76 MMT, which may weigh on prices. The International Coffee Organization reported a 0.3% decline in global coffee exports to 138.658 million bags, while the USDA anticipates a record 2025/26 world production of 178.848 million bags, though arabica output is expected to drop 4.7% year-over-year.
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