Coffee prices experienced a mixed outcome on Friday, with July arabica coffee (KCN26) closing down by 1.05 cents, or 0.38%, while July ICE robusta coffee (RMN26) rose by 57 cents, equating to a 1.68% increase. The divergence in price trends highlights ongoing concerns in the coffee market, particularly regarding weather conditions affecting crop yields.
Robusta prices surged sharply, driven primarily by dry weather conditions in Vietnam, the world’s leading robusta coffee producer. Recent weather reports from Vaisala indicated that rainfall in Vietnam’s Central Highlands, the vital coffee-growing region, has been irregular, raising alarm over the potential impact on robusta cherry growth. This led traders to speculate that without significant rainfall, the yield for the upcoming robusta crop could be at risk.
In addition to concerns in Vietnam, traders are wary of the implications of the El Niño weather phenomenon on Brazil’s coffee crop for the upcoming year. According to forecasts, El Niño may delay crucial rainfall during September and October, a period critical for coffee tree flowering, which is essential for the following year’s crop yield. The U.S. NOAA has projected an 82% probability that El Niño conditions will develop between May and July, with a notable chance (67%) of a “Super El Niño” influencing weather patterns.
Over the past month, coffee prices have generally trended lower, particularly for arabica, which fell to its lowest level in 1.5 years. This decline has been attributed to an improved global supply forecast. The Coffee Trading Academy previously estimated an increase in Brazil’s coffee harvest for the 2026/27 season, projecting a rise of 12% year-on-year to an estimated 71.4 million bags. Further forecasts indicated that Brazil’s production could reach record levels, with projections from Marex Group Plc estimating as high as 75.9 million bags.
However, robusta coffee’s price rise could be tempered by soaring exports from Vietnam, reflecting a 15.8% year-on-year increase in coffee exports during the first quarter of 2026. Vietnam’s overall coffee production is also expected to rise, contributing to the bearish sentiment in the robusta market.
Currently, ICE coffee inventories have shown a downward trend, which could support coffee prices. Robust coffee inventories dropped to a two-year low of 3,631 lots, but recently rebounded to a six-week high of 3,968 lots. Meanwhile, arabica coffee inventories also fell to a three-month low of 449,567 bags.
Compounding the market dynamics, Brazil reported a decline in green coffee exports for April, where exports decreased by 1.3% year-on-year. Concurrently, the ongoing closure of the Strait of Hormuz is impacting global coffee supply chains by elevating shipping rates and related costs, further exerting upward pressure on prices.
In contrast, the International Coffee Organization reported a 0.3% year-on-year decline in global coffee exports for the current marketing year, signaling a tightening in the market. According to the USDA’s Foreign Agricultural Service, world coffee production is anticipated to rise by 2.0% year-on-year in 2025/26, although with contrasting trends in arabica and robusta outputs expected across Brazil and Vietnam.
As coffee traders continue to navigate the complexities of supply and demand, weather patterns, and global trade disruptions, the market will remain closely monitored for further developments.
