September arabica coffee (KCU26) on Friday closed up +4.40 (+1.42%), and September ICE robusta coffee (RMU26) closed up +49 (+1.32%).
Coffee prices rebounded higher on Friday after falling sharply on Thursday. NY Sep coffee on Friday edged to a new 2.5-week low, but then recovered on some apparent pre-weekend short-covering.
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The coffee market is sorting through the implications of President Trump’s late-Thursday announcement of broad tariffs ranging from 10% to 12.5% on 60 nations, replacing the 10% global import tax that expired. The new tariffs are based on trade authority under Section 301 of the Trade Act of 1974 tied to a claim of forced labor in supply chains. Mr. Trump had to seek new trade authority after the Supreme Court struck down his so-called reciprocal tariffs in February and his substitute 10% global import tax expired this week.
However, the new forced-labor tariffs exclude some key items such as fuel, foods, fertilizer, and products covered by the North American trade agreement with Mexico and Canada. Brazil’s Development, Industry, Trade and Services Minister Marcio Elias Rosa told reporters in Brasilia late Thursday that Brazilian farm products such as coffee, meat, orange juice, and fruit will not be subject to the new tariffs. That suggests the new tariffs will not disrupt coffee exports to the US.
Coffee prices on Thursday fell due to the USDA’s 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 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 were mildly below that level at 4,200 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 311, 317 bags on Friday.
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.
Somar Meteorologia reported on Monday that 0.2 mm of rain, or 20% of the historical average, fell in the week ended July 19 in Minas Gerais, Brazil’s biggest coffee-growing region.
Soaring coffee exports from Vietnam, the world’s largest robusta producer, are bearish for robusta prices. On July 3, Vietnam’s National Statistics Office reported that Vietnam’s 2026 coffee exports (Jan-Jun) rose by +7.3% y/y to 1.05 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).
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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