July arabica coffee (KCN26) closed down 0.99% at $‑2.75, while July ICE robusta (RMN26) rose 0.14% to +5.
On Thursday, coffee prices relinquished early gains and finished mixed as the dollar index ($DXY) climbed to a 13‑month peak, prompting long liquidation in coffee futures. After rallying sharply over the past week and reaching five‑week highs, prices retreated as forecasts of moderate to heavy rain in Brazil’s coffee‑growing regions were tempered by expectations of drier conditions later in the week.
ICE coffee inventories have declined over the past three months, supporting price levels. Arabica stocks fell to a 2.25‑year low of 394,267 bags on Thursday, while robusta stocks dropped to a two‑year low on May 15 before rebounding to a 2.25‑month high of 4,032 lots on Thursday.
Concerns that an El Niño pattern could impair Brazil’s crop next year are keeping prices elevated. Traders note that El Niño may delay September‑October rains, disrupting tree flowering and potentially reducing the 2026/27 harvest.
The U.S. National Oceanic and Atmospheric Administration estimates a 67% chance of a “Super El Niño” this year, the strongest on record. The Japan Meteorological Agency has confirmed El Niño conditions across the equatorial Pacific, suggesting an increased likelihood of floods, droughts, and temperature swings that could affect coffee production in Asia and South America.
Last Tuesday, arabica futures hit a 19‑month low and robusta fell to a two‑month low amid expectations of a bumper Brazilian harvest. On June 3, the USDA’s Foreign Agricultural Service projected a record 71.9 million bags for Brazil’s 2026/27 crop, a 14% increase year‑over‑year. Rabobank raised its 2026/27 global arabica surplus estimate to 9.5 million bags, and Cecafe reported a 4.2% year‑over‑year rise in May green coffee exports to 2.73 million bags.
Exports from Vietnam, the world’s largest robusta producer, are exerting downward pressure on prices. Vietnam’s January‑May 2026 exports increased 7.9% year‑over‑year to 922,000 metric tons, while 2025 exports rose 17.5% to 1.58 million metric tons. Production for 2025/26 is forecast to climb 6% to a four‑year high of 1.76 million metric tons (29.4 million bags).
The ongoing closure of the Strait of Hormuz continues to tighten global coffee supplies, supporting price gains as shipping, insurance, fertilizer, and fuel costs rise for importers and roasters.
The International Coffee Organization reported on November 7 that global exports for the current marketing year (Oct‑Sep) slipped 0.3% year‑over‑year to 138.658 million bags.
The USDA’s Foreign Agricultural Service projects world coffee production of 178.848 million bags for 2025/26, a 2% increase year‑over‑year, with arabica output declining 4.7% to 95.515 million bags and robusta rising 10.9% to 83.333 million bags. Brazil’s 2025/26 production is expected to fall 3.1% to 63 million bags, while Vietnam’s output is projected to rise 6.2% to a four‑year high of 30.8 million bags. Ending stocks are forecast to decline 5.4% to 20.148 million bags.
