Coffee futures experienced a mixed session on Thursday, June 19, 2026, as a significant rally in the dollar index to a 13-month high triggered long liquidation across the market. July arabica coffee (KCN26) closed down -2.75, or -0.99%, while July ICE robusta coffee (RMN26) saw a slight gain of +5, or +0.14%, after both contracts initially rose earlier in the day. The dollar’s strength emerged as a primary driver, overshadowing earlier gains fueled by supply concerns.
Dollar’s Dominance and Market Reaction
The dollar index ($DXY) reaching a 13-month high was the pivotal factor in Thursday’s coffee market dynamics, according to market analysts. This surge in the dollar typically makes dollar-denominated commodities, such as coffee, more expensive for holders of other currencies, often leading to a sell-off or ‘long liquidation’ in futures contracts. Despite coffee prices having rallied sharply over the preceding week, hitting 5-week highs on Thursday, the dollar’s ascent prompted investors to unwind bullish positions, resulting in the day’s mixed close.
Supply-Side Dynamics: Brazil’s Weather and Harvest Outlook
Brazil, a critical global coffee producer, presented a complex picture of weather-related supply concerns. Initial support for coffee prices stemmed from forecasts by Vaisala, predicting moderate to heavy rainfall across Brazil’s coffee-growing regions this week, which could delay the harvest. However, this bullish sentiment was partially offset later in the day when meteorologist Climatempo indicated that Brazil’s key coffee-growing regions are expected to experience mostly dry weather next week, easing immediate harvest delay fears.
Looking further ahead, the prospect of an El Niño weather pattern continues to cast a shadow over future crops. Coffee trader Commercial noted that an El Niño could delay rains in Brazil during September and October, a crucial period for tree flowering, potentially harming Brazil’s 2026/27 coffee crop. The US National Oceanic and Atmospheric Administration (NOAA) estimates a 67% probability of a ‘Super El Niño’ this year, potentially the strongest on record. The Japan Meteorological Agency confirmed an El Niño pattern had formed across the equatorial Pacific last Wednesday, setting the stage for potential floods, droughts, and temperature fluctuations later this year that could hinder coffee production in Asia and South America.
Contrasting these concerns, the broader outlook for Brazil’s current crop remains robust. Last Tuesday, arabica coffee fell to a 19-month nearest-futures low, and robusta slid to a 2-month low, influenced by expectations of a bumper coffee crop in Brazil this year. On June 3, the USDA’s Foreign Agricultural Service (FAS) forecast a record 2026/27 Brazil coffee crop of 71.9 million bags, marking a significant +14% year-over-year increase. Reinforcing this, Rabobank raised its 2026/27 global arabica coffee surplus estimate to 9.5 million bags, up from 7.0 million bags previously.
Global Inventory and Export Trends
Inventory levels have shown mixed signals, with ICE arabica coffee inventories falling to a 2.25-year low of 394,267 bags on Thursday, a factor generally supportive of prices. ICE robusta inventories, however, presented a more volatile trend, initially falling to a 2-year low of 3,631 lots on May 15 before jumping to a 2.25-month high of 4,032 lots on Thursday.
Export data from key producing nations further illustrates the complex supply landscape. Cecafe reported last Thursday that Brazil’s May green coffee exports rose +4.2% year-over-year to 2.73 million bags. Meanwhile, Vietnam, the world’s largest robusta producer, has seen soaring exports, which are generally bearish for robusta prices. Vietnam’s National Statistics Office reported on June 2 that the country’s 2026 coffee exports (Jan-May) increased by +7.9% year-over-year to 922,000 metric tons. Furthermore, Vietnam’s 2025 coffee exports jumped by +17.5% year-over-year to 1.58 million metric tons, with its 2025/26 coffee production projected to climb +6% year-over-year to a 4-year high of 1.76 million metric tons (29.4 million bags).
Geopolitical and Broader Market Influences
Geopolitical factors also continue to influence global coffee supplies. The ongoing closure of the Strait of Hormuz has disrupted global coffee supplies, acting as a bullish factor for prices by increasing global shipping rates, insurance, fertilizer, and fuel costs. These elevated expenses translate into higher costs for coffee importers and roasters, ultimately impacting consumer prices.
Broader global forecasts from the International Coffee Organization (ICO) and the USDA’s FAS provide a mixed long-term outlook. The ICO reported on November 7 that global coffee exports for the current marketing year (Oct-Sep) fell -0.3% year-over-year to 138.658 million bags. Conversely, the FAS bi-annual report on December 18 projected that world coffee production in 2025/26 will increase by +2.0% year-over-year to a record 178.848 million bags. This global increase is driven by a +10.9% increase in robusta production to 83.333 million bags, offsetting a -4.7% decrease in arabica production to 95.515 million bags. Specifically, FAS forecasted Brazil’s 2025/26 coffee production to decline by -3.1% year-over-year to 63 million bags, while Vietnam’s 2025/26 coffee output is expected to rise by 6.2% year-over-year to a 4-year high of 30.8 million bags. Despite the projected production increase, FAS forecasts that 2025/26 ending stocks will fall by -5.4% to 20.148 million bags from 21.307 million bags in 2024/25.
The immediate impact of a strengthening dollar on Thursday highlights the currency’s significant role in commodity markets, capable of quickly shifting sentiment even amidst a complex array of supply and demand fundamentals. While weather patterns, inventory levels, and export figures continue to paint a nuanced picture for coffee, the dollar’s recent rally served as a potent reminder of macroeconomic forces at play.
