Coffee Prices Tumble as Brazil’s Coffee Exports Rebound

Arabica coffee (KCU26) dropped -13.60% to a 1-week low, while ICE robusta coffee (RMU26) fell -11.60% (-2.97%) today. Prices are under pressure due to a surge in Brazil’s coffee exports, with the industry trade group Cecafe reporting a 14.4% year-over-year increase in June green coffee exports to 2.64 million bags.

Coffee markets have swung dramatically since reaching 5.5-month highs last week, driven by illiquid trading conditions. The ICE tightened margin requirements for coffee futures twice last week, triggering reduced liquidity and heightened volatility as commodity funds liquidated holdings, amplifying one-way price movements.

Funds hold the largest net-long positions in ICE robusta coffee since 2024, with positions rising 5,607 contracts last week to 44,195 contracts-the highest in over two years. This excessive long exposure could exacerbate any price decline.

Brazil’s coffee harvest progress is slower than average. The Safras & Mercado report revealed that as of July 1, the 2026/27 crop was 52% complete, compared to 60% at the same stage last year and the five-year average of 55%. The delayed harvest and concerns over potential quality impacts from heavy rains earlier in the year have kept prices elevated this year.

ICE coffee inventories have been falling recently. ICE arabica inventory fell to a 2.25-year low of 334,289 bags on Wednesday, while robusta inventories rose to a three-month high of 4,220 lots on Monday after bottoming in May.

El Niño is a key price catalyst. Commercial Coffee warned that El Niño could delay Brazil’s September and October rains. A lack of rainfall during tree flowering could harm the 2026/27 crop. The US Climate Prediction Center now forecasts El Niño to be one of the strongest in over 75 years, with potential for extreme weather conditions in South America and Asia that may further disrupt coffee production.

Somar Meteorologia reported no rainfall in Minas Gerais, Brazil’s largest coffee-producing region, for the week ending July 5.

Coffee markets were bearish earlier in June after the USDA projected a record 2026/27 Brazilian crop of 71.9 million bags, up 14% year-over-year. Vietnam’s rising robusta exports (up 7.3% year-over-year in January-June) and projected 2025/26 production increase of 6% (1.76 MMT) added bearish pressure on ICE robusta prices.

The ICO reported global coffee exports fell 0.3% year-over-year in the current marketing year to 138.658 million bags. Conversely, USDA FAS forecasts 2025/26 global production to rise 2% to a record 178.848 million bags, with Brazil’s output down 3.1% to 63 million bags and Vietnam’s output up 6.2% to 30.8 million bags.

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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