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September arabica coffee (KCU26) closed up +13.90 (+4.32%) on Friday, and September ICE robusta coffee (RMU26) closed down -11 (-0.29%).
Coffee prices settled mixed on Friday, with arabica up sharply at a 1-week high. Friday’s decline in the dollar index ($DXY) to a 7-week low is bullish for coffee prices. Also, arabica coffee supplies continue to tighten as ICE-monitored arabica coffee inventories fell to a 2.5-year low on Friday.
Arabica has support due to the slow pace of Brazil’s coffee harvest. The harvest among members of Cooxupe co-op was 67.3% complete as of July 31, behind the year-earlier pace of 74.2%. On July 17, 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 4.5-month high of 4,261 lots on Friday. By contrast, a bullish factor for arabica coffee prices was that ICE arabica coffee inventories fell to a 2.5-year low of 244,172 bags on Friday.
On Monday, Somar Meteorologia reported that no rain fell in the week ended August 2 in Brazil’s Minas Gerais, the country’s main arabica-coffee growing region.
The latest USDA biannual forecast was bearish for coffee prices. On July 22, the USDA forecast 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.
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.
Soaring coffee exports from Vietnam, the world’s largest robusta producer, are bearish for robusta prices. On Sunday, Vietnam’s National Statistics Office reported that Vietnam’s 2026 coffee exports (Jan-Jul) rose by +21.1% y/y to 1.31 MMT. Vietnam’s 2025 coffee exports jumped by +17.5% y/y to 1.58 MMT. Also, Vietnam’s 2025/26 coffee production is projected to climb +6% y/y to a 4-year high of 1.76 MMT (29.4 million bags).
