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September arabica coffee (KCU26) on Thursday closed down -57.25 (-2.29%), and September ICE robusta coffee (RMU26) closed down -88 (-2.32%).
Coffee prices fell on Thursday after the USDA forecast late Wednesday 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.
Coffee prices are also under pressure on the outlook for drier conditions in Brazil’s coffee-growing regions over the near-term, which should accelerate the country’s coffee harvest. However, the slow pace of Brazil’s coffee harvest is still supportive of coffee prices. The harvest among members of Cooxupe co-op was 47.3% complete as of July 17, behind the year-earlier pace of 59%. Last Friday, 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-month high of 4,254 lots on Wednesday, although inventories fell back slightly to 4,200 lots on Thursday. By contrast, a bullish factor for arabica coffee prices was that ICE arabica coffee inventories fell to a 2.25-year low of 315,883 bags on Thursday.
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.
