Arabica Coffee Prices Slump as Dryness in Brazil Aids the Coffee Harvest

September arabica coffee (KCU26) today is down -10.10 (-3.04%), and September ICE robusta coffee (RMU26) is up +10 (+0.26%).

Coffee prices are mixed today.  Arabica coffee is sharply lower as drier conditions in Brazil’s coffee-growing regions should allow for the pace of the country’s coffee harvest to pick up.  Somar Meteorologia reported today that no rain fell in the week ended August 2 in Minas Gerais, Brazil’s biggest coffee-growing region.

Tighter near-term supplies are supportive for Arabica coffee prices.  ICE Arabica coffee inventories have steadily declined over the past 4.5 months and fell to a 2.5-year low last Friday. 

The slow pace of Brazil’s coffee harvest is supportive of coffee prices.  The harvest among members of Cooxupe co-op was 58.3% complete as of July 24, behind the year-earlier pace of 67%.  On July 17, Safras & Mercado reported that Brazil’s 2026/27 coffee harvest was 64% complete as of July 15, behind last year’s comparable level of 77% and the five-year average of 70%. 

Rising inventories are weighing on robusta coffee as ICE robusta inventories climbed to a 4.25-month high of 4,254 lots on July 22, although inventories were mildly below that level at 4,213 lots today.  By contrast, a bullish factor for arabica coffee prices was that ICE arabica coffee inventories fell to a 2.5-year low of 264,179 bags last Friday.

The latest USDA biannual forecast was bearish for coffee prices.  On July 22, the USDA forecast that global coffee output in the 2026-27 season will rise by +6.0% (10.8 million bags) to a record 189.7 million bags, mainly due to improved growing conditions in Brazil.  The USDA expects global arabica production to rise +12% y/y, although robusta production is expected to fall by -0.7% y/y.  World ending stocks are expected to rise +1.9 million bags to 26.3 million bags.  On June 3, the USDA’s Foreign Agricultural Service (FAS) forecast a record 2026/27 Brazil coffee crop of 71.9 million bags, up +14% y/y.

Concerns that an El Niño weather pattern could hurt Brazil’s coffee crop next year are bullish for prices. Coffee trader Commercial said the El Niño weather pattern may delay rains in Brazil this September and October, when tree flowering normally occurs, hurting Brazil’s 2026/27 coffee crop. On July 8, the US Climate Prediction Center said the El Niño weather pattern that emerged across the equatorial Pacific last month will likely be one of the strongest in more than 75 years. This sets the stage for months of possible floods, droughts, and temperature fluctuations later this year that could hinder coffee production in Asia and South America. 

Soaring coffee exports from Vietnam, the world’s largest robusta producer, are bearish for robusta prices.  On Sunday, Vietnam’s National Statistics Office reported that Vietnam’s 2026 coffee exports (Jan-Jul) rose by +21.1% y/y to 1.31 MMT.  Vietnam’s 2025 coffee exports jumped by +17.5% y/y to 1.58 MMT. Also, Vietnam’s 2025/26 coffee production is projected to climb +6% y/y to a 4-year high of 1.76 MMT (29.4 million bags).