Arabica Coffee Futures at Over 1-Week Low

Arabica coffee futures have fluctuated in recent weeks, before consolidating below $3.10 per pound to their lowest level in a month. Still, the market continued to be supported by tight supplies, uncertainty over the quality of Brazil's harvest, coffee growers' reluctance to sell, and weather-related risks associated with El Niño. Although a record Brazilian harvest of more than 70 million bags is expected this season, the balance between supply and demand remains tight, particularly in the higher-quality. Traders remain concerned that rains in key producing regions, including Minas Gerais and São Paulo, during June and July, may have affected the quality of part of the crop. ICE arabica coffee fell to a 2.5-year low of 251,417 bags as of August 7, down sharply from the 754,516 bags last year. At the same time, Brazilian producers continue to sell gradually, limiting immediate coffee availability. Meanwhile, the developing "super" El Niño remains a key risk to next year's harvest.

Arabica coffee futures fluctuated around $3.3 per pound, remaining close to their highest since 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.