Arabica Coffee Futures Hit 1-Month Peak

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.

Arabica coffee futures rose to around $3.4 per pound as volatile trading persisted amid uncertainty over Brazil's crop outlook. Earlier this week, prices climbed roughly 16%, recording their largest gain since 2000 and surpassing the $3.50 mark for the first time since January. The sharp rally was triggered by weather-related supply concerns in Brazil, where heavy June rains delayed harvesting before a sharp shift to dry conditions raised fresh questions over bean quality and the next crop. Coffee crops are particularly sensitive to abrupt weather changes. Although drier weather has improved fieldwork, the harvest of what is expected to be a record crop remains behind schedule. In Southern Minas Gerais, Brazil's main coffee-producing region, only 30% of the harvest had been completed by mid-season, compared with 52% a year earlier. Meanwhile, traders continued to monitor the risk of El Niño and its potential impact on flowering and the development of the 2027/28 crop.

Arabica coffee futures fell nearly 8% to around $3.20 per pound, as profit-taking followed a rally to a five-month high of nearly $3.50 on July 6. The earlier advance was underpinned by weather concerns in top producer Brazil, where colder forecasts, potential El Niño-related risks, harvest delays, and tight coffee supplies triggered buying and short covering. However, updated forecasts from Climatempo pointed to mostly dry weather across Brazil's main coffee-growing regions, supporting harvest progress and easing frost concerns. Safras & Mercado reported that Brazil's 2026/27 coffee harvest had reached only 52% of the planted area by July 1, below last year's 60% pace and the five-year average of 55%, highlighting the slower arrival of new supplies.