Coffee Prices Rise on Brazil Weather Risks

December arabica coffee (KCZ26) closed up +1.25 (+0.43%) on Wednesday, and November ICE robusta coffee (RMX26) closed up +35 (+1.03%).

Coffee prices settled higher on Wednesday, with arabica posting a 3‑week high and robusta posting a 1‑month high. Coffee prices are climbing as dry conditions in Brazil could hurt the prospects for Brazil’s 2026/27 coffee crop, currently in its all‑important flowering stage. Meteorologist Climatempo forecasts limited rain chances for Brazil’s Minas Gerais region, the country’s largest arabica‑coffee‑producing area, over the coming week.

Concessions that an El Niño pattern may disrupt Brazil’s coffee harvest underscore stronger price momentum. The coffee trader Commercial indicates that El Niño‑related climate anomalies could postpone rains in September and October—precisely when tree flowering typically occurs—affecting the 2026/27 harvest.

El Niño conditions, the U.S. Climate Prediction Center warned on July 8, are expected to be among the strongest in over 75 years. Such a scenario threatens to bring floods, droughts, and temperature extremes that could impair coffee production across Asia and South America throughout the remainder of the year.

Prices have fallen under sustained pressure, reaching a 3.25‑month low on the previous close. The International Coffee Organization (ICO) anticipates a record‑setting global crop for 2025/26, projecting a 4.4 % year‑on‑year increase to 183.6 million bags worldwide while consumption drops 0.9 % y/y to 180.6 million bags, creating a 3 million‑bag surplus—the first in five years.

Conab, Brazil’s official crop forecasting agency, raised its 2026 coffee production forecast to 67.6 million bags up from 66.7 million. Projections show arabica output increasing by 34.8 % y/y to 48.21 million bags, whereas robusta is expected to decline 6.6 % y/y to 19.39 million bags.

Ideal growth environments in Brazil and Vietnam weigh against rising prices. Excessive precipitation during the critical flowering phase could enhance the upcoming Brazilian harvest—a negative factor for market valuations. Reporters at Somar Meteorologia noted 29.7 mm of rain—112 % of the historical norm—in Minas Gerais, the nation’s leading arabica zone, over the week ending September 27. In Vietnam, Vaisala reports that ample rains have boosted soil moisture and support cherry development in the Central Highlands, the country’s chief coffee‑growing area.

As Brazilian harvests conclude, Arabica beans enter global trade, bolstering supplies and pressuring prices. Cecafe recorded an 31 % year‑over‑year rise in August exports, reaching 4.155 million bags, the highest monthly figure yet observed. Robusta exports surged 54 % to 953,592 bags, and the trade ministry reported an 44.6 % increase in August exports to 206,618 MMT, the best performance in eight months.

Supplies from Vietnam, the world’s top Robusta exporter, further suppress robusta values. Vietnam’s statistical office noted a 13.7 % y/y rise in 2026 exports (January–August), climbing to 1.33 gigatons, while 2025 saw a 17.5 % increase to 1.58 gigatons. The nation projects a 6 % y/y uptick in 2025/26 production, reaching a four‑year high of 1.76 gigatons (28.4 million bags).

Falling inventories lend support to Arabica futures, with ICE reports showing coffee inventories slipping to a 27‑year low of 217,646 bags on September 15, though recovery to an 8‑week peak of 260,054 bags occurred earlier in the day. Conversely, elevated robusta inventories peaked at a 10‑month high of 5,398 lots last Thursday, flagging downside potential.

The USDA’s biannual outlook was moderately pessimistic for commodities. A July 22 forecast projects a 6.0 % increase in global coffee output for 2026/27, reaching 189.7 million bags—primarily buoyed by favorable planting conditions in Brazil. Expected domestic shifts include a 12 % rise in global Arabica production and a slight dip in Robusta output.

World ending stock levels are anticipated to climb 1.9 million bags to 26.3 million bags. Earlier, the USDA’s Foreign Agricultural Service (FAS) issued a June 3 projection of a record Brazilian 2026/27 coffee crop at 71.9 million bags, a 14 % jump on prior releases.

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