September arabica coffee futures (KCU26) closed down -8.70, or -2.81%, on Thursday, settling lower as profit-taking and long liquidation pressured prices ahead of the extended holiday weekend, with US markets slated for closure on Friday. This decline occurred even as September ICE robusta coffee (RMU26) registered a modest gain, closing up +12, or +0.32%, resulting in a mixed market close after both varieties had reached fresh 4.75-month highs earlier in the session.
Brazilian Weather Disruptions and Supply Concerns
The recent volatility in coffee markets has been underpinned by significant weather-related developments in Brazil, the world’s largest coffee producer. Heavy rainfall has notably delayed the country’s coffee harvest, raising concerns about both the quantity and quality of the crop. Somar Meteorologia reported on Monday that Minas Gerais, Brazil’s primary coffee-growing region, experienced an extraordinary 31.3 mm of rain in the week through June 28, representing 1,956% of the historical average for that period. Such conditions have disrupted fieldwork and are widely believed to have negatively impacted crop quality.
Adding to supply anxieties, Brazilian coffee farmers are reportedly holding back on sales, anticipating potential price increases and bracing for the anticipated impact of this year’s El Niño weather event. This strategic withholding of supply by producers further tightens the immediate market.
El Niño Threat and Inventory Declines
The looming threat of an El Niño weather pattern continues to be a significant bullish factor for coffee prices, particularly concerning next year’s 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 on June 10 that an El Niño weather pattern had already formed across the equatorial Pacific, setting the stage for potential floods, droughts, and temperature fluctuations later this year that could hinder coffee production across Asia and South America.
Coffee trader Commercial has specifically warned that the El Niño pattern could delay crucial rains in Brazil during September and October, a period when tree flowering typically occurs, thereby jeopardizing Brazil’s 2026/27 coffee crop.
Further supporting prices, ICE coffee inventories have shown a consistent downward trend over the past three months. ICE arabica coffee inventories notably fell to a 2.25-year low of 375,079 bags on Wednesday. While ICE robusta inventories initially dropped to a 2-year low of 3,631 lots on May 15, they subsequently rebounded to a 2.75-month high of 4,053 lots on Monday.
Conflicting Global Production Forecasts
Despite the immediate bullish signals from weather and inventories, the broader outlook for global coffee production presents a more complex picture, with some forecasts suggesting ample supply. On June 9, arabica coffee had fallen to a 19-month nearest-futures low, and robusta to a 2-month low, partly due to an earlier outlook for a bumper coffee crop in Brazil this year. The USDA’s Foreign Agricultural Service (FAS) forecast on June 3 a record 2026/27 Brazil coffee crop of 71.9 million bags, marking a +14% year-over-year increase.
Similarly, Rabobank has raised its 2026/27 global arabica coffee surplus estimate to 9.5 million bags, up from a previous projection of 7.0 million bags. Data from Cecafe on June 11 indicated that Brazil’s May green coffee exports rose +4.2% year-over-year to 2.73 million bags, reflecting robust export activity.
Vietnamese Exports and Broader Supply Dynamics
Soaring coffee exports from Vietnam, the world’s largest robusta producer, are exerting bearish pressure on robusta prices. Vietnam’s National Statistics Office reported on June 2 that the country’s 2026 coffee exports for January-May increased by +7.9% year-over-year to 922,000 metric tons. This follows a significant jump in 2025 coffee exports, which rose by +17.5% year-over-year to 1.58 million metric tons. Furthermore, Vietnam’s 2025/26 coffee production is projected to climb +6% year-over-year to a 4-year high of 1.76 million metric tons, equivalent to 29.4 million bags.
Globally, the International Coffee Organization (ICO) reported on November 7 that global coffee exports for the current marketing year (October-September) saw a slight decrease of -0.3% year-over-year, totaling 138.658 million bags. However, the USDA’s FAS bi-annual report on December 18 projected an overall increase in world coffee production for 2025/26, forecasting a +2.0% year-over-year rise 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, which is expected to offset a -4.7% decrease in arabica production to 95.515 million bags.
Specifically, FAS forecasted that Brazil’s 2025/26 coffee production would 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 these production figures, 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, indicating a potential tightening of available supply even with increased overall production.
The coffee market thus presents a complex interplay of immediate profit-taking pressures, significant weather-related supply risks in key producing regions, and long-term forecasts that suggest both robusta abundance and potential arabica deficits, all contributing to an uncertain price trajectory beyond the holiday weekend.
