Arabica Coffee Futures at Over 5-Month Low

Arabica coffee traded near $3.34 per pound, easing after three consecutive sessions of gains but remaining close to its highest level in more than two weeks and not far from the strongest prices since early January. Unusually heavy rainfall has delayed harvesting in Minas Gerais, Brazil's largest coffee-growing region, slowing the flow of beans to the market and raising concerns about crop quality. Supporting prices further, ICE-certified arabica inventories have dropped to their lowest level in around two-and-a-half years, highlighting tight available supplies. Still, bearish factors remain. The USDA expects global coffee production to reach a record high in the 2026/27 season, driven by a significantly larger Brazilian arabica crop, while robust exports from Vietnam continue to ease pressure on the robusta market. Traders are also closely watching the developing El Niño, which could threaten flowering and next year's harvest, keeping weather-related risk premiums firmly in place.

Arabica coffee futures traded around $3.10 per pound, consolidating near their lowest level in more than a week after a sharp rally and recent volatility driven by weather-related supply concerns. Dealers said the harvest in top coffee grower Brazil had been gathering pace, though lagging last year's pace, reinforcing expectations of greater supply in the short term. Market participants also continued to monitor bean quality following delays caused by heavy rains in June and early July. Tight global coffee stocks left prices sensitive to any further harvest delays or signs of lower-quality beans. At the same time, buyers and sellers continue to adopt a cautious stance, which reduces the volume of transactions in the physical market. Meanwhile, Cecafé reported that Brazil's June green coffee exports increased 14.4% from a year earlier to 2.64 million bags. The exemption of Brazilian instant coffee from the new 25% US tariff also provided relief to exporters.

Arabica coffee futures oscillated between $3.20 and $3.50 per pound, as investors closely tracked weather conditions and harvest progress in top producer Brazil. Volatility has intensified recently as tight global supplies have increased the market's sensitivity to weather developments, prompting investors to quickly adjust their positions. Despite expectations of a bumper Brazilian crop this season, weather remains a key source of uncertainty. Heavy June rains delayed harvesting before a subsequent dry spell raised concerns over bean quality and next season's crop. More recently, fresh forecasts of rain during the second half of July, coinciding with a critical period for harvesting, drying, and processing, renewed fears of further disruptions. Still, no frost was expected, and the risk of severe cold across the main producing regions remained low. Meanwhile, investors continued to monitor the risk of El Niño and its potential impact on the development of the 2027/28 crop.