Coffee Futures

Following a magnitude 7.4 earthquake that struck Colombia on the 10th, transport and exports from major coffee-growing regions were restricted as of the 12th. According to the Colombian Coffee Growers Federation and major agricultural commodities trader Sucafina, landslides in mountainous areas have cut off rural roads, making it difficult to move coffee from farms to warehouses and ports. The port of Buenaventura, Colombia's largest export port handling about 60 to 70 percent of the country's coffee exports, temporarily suspended operations at its port terminals but later announced it would gradually resume operations at some facilities deemed safe. Colombia is the world's third-largest coffee producer and supplies about a quarter of the coffee consumed in the United States.

Arabica coffee prices rose on Wednesday after a massive earthquake in Colombia temporarily halted exports from the world's second-largest producer of arabica beans. September arabica coffee closed up 4.35 cents, or 1.30%, while September ICE robusta coffee closed down 13 cents, or 0.34%. The 7.4 magnitude quake hit coffee-growing provinces Caldas and Risaralda, which account for about a quarter of Colombia's production, and shipping firm Maersk said terminal operations in Buenaventura, which handles most of Colombia's coffee exports, have been temporarily suspended. Falling ICE arabica inventories to a 2.75-year low of 240,285 bags also supported prices, while robusta was pressured by rising inventories to a 5-month high of 4,364 lots and soaring exports from Vietnam.

Arabica coffee prices surged to a one-week high on Friday, with September arabica closing up 13.90 cents, or 4.32%, driven by a weaker dollar and tightening exchange inventories. The dollar index fell to a seven-week low, boosting dollar-denominated commodities, while ICE-monitored arabica inventories dropped to a 2.5-year low of 244,172 bags. In contrast, robusta coffee edged lower as ICE robusta inventories rose to a 4.5-month high of 4,261 lots. The slow pace of Brazil's coffee harvest also supported arabica, with Cooxupe co-op reporting harvest completion at 67.3% as of July 31, behind last year's 74.2%. Meanwhile, the USDA's latest biannual forecast projected a record global coffee output of 189.7 million bags for the 2026-27 season, up 6.0% year-on-year, though concerns persist that a strong El Niño could damage Brazil's next crop.

Coffee prices rose sharply on concern that heavy rain in Brazil will further disrupt the country’s coffee harvest and tighten global supplies. September arabica coffee gained 9.60 cents, or 3.06%, while September ICE robusta coffee added 33 dollars, or 0.88%. Somar Meteorologia reported that 32.4 millimeters of rain, or 2700% of the historical average, fell in the week ended July 26 in Minas Gerais, Brazil’s biggest coffee-growing region. The slow pace of Brazil’s harvest is supportive, with the Cooxupe co-op harvest 47.3% complete as of July 17, behind the year-earlier pace of 59%, and Safras & Mercado reporting Brazil’s 2026/27 coffee harvest 64% complete as of July 15, behind last year’s 77% and the five-year average of 70%. Last Friday, coffee prices had tumbled to three-week lows after the USDA forecast global coffee output in the 2026-27 season will rise 6% to a record 189.7 million bags, mainly due to improved growing conditions in Brazil, with global arabica production expected to rise 12% year-over-year and robusta production to fall 0.7%. Rising inventories weighed on robusta, with ICE robusta inventories climbing to a 4.25-month high of 4,254 lots last Wednesday, while a bullish factor for arabica was that ICE arabica inventories fell to a 2.5-year low of 311,317 bags last Friday. Concerns that an El Niño weather pattern could hurt Brazil’s coffee crop next year are bullish, as coffee trader Commercial said El Niño may delay rains in Brazil this September and October, when tree flowering normally occurs, and the US Climate Prediction Center said the El Niño that emerged last month will likely be one of the strongest in more than 75 years. Soaring coffee exports from Vietnam, the world’s largest robusta producer, are bearish for robusta prices, with Vietnam’s 2026 coffee exports in the first half rising 7.3% year-over-year to 1.05 million metric tons and its 2025/26 production projected to climb 6% to a four-year high of 1.76 million metric tons.

The Brazilian government has disclosed that around 2,000 export items to the United States will be exempt from the latest tariff measures imposed by President Donald Trump's administration, including coffee and orange juice, which are key exports for the country. Brazil's Minister of Trade and Industry, Marcio Elias Rosa, said that although the US announced a 12.5 percent import tariff on Brazilian goods citing forced labor concerns, roughly 2,000 Brazilian products will be spared from the measure. Earlier last week, the Trump administration imposed a 25 percent tariff on various Brazilian goods, arguing that Brazil has unfair trade practices. However, some product categories remain affected by both sets of tariffs, such as footwear, machinery, and equipment, which will face both the 25 percent and 12.5 percent duties, while items like pulp will only be subject to the 12.5 percent rate.

Experts warn that coffee prices in the United States could climb even higher if the US government imposes trade measures against Nicaragua in response to President Daniel Ortega's suspension of elections and single-party political system. Nicaragua is a major coffee exporter, and the US is its largest customer, accounting for 35% of Nicaragua's total coffee exports. Any import restrictions or tariff hikes would therefore hit both Nicaraguan farmers and the US coffee market, where supply is already tight. Currently, US retail coffee prices are near their highest level in almost a decade, averaging 9.45 US dollars per pound in June. With roughly two in three Americans drinking coffee every day, coffee prices have become a politically sensitive issue ahead of the midterm elections, and the National Coffee Association of the USA is pushing for coffee to be exempted from trade restriction measures.

Coffee prices settled sharply higher on Friday amid a delay in Brazil's coffee harvest. September arabica coffee closed up 2.46% and September ICE robusta coffee closed up 2.11%. Safras & Mercado reported that Brazil's 2026/27 coffee harvest is 64% complete as of July 15, behind last year's comparable level of 77% and the five-year average of 70%. Heavy rains in Brazil have disrupted fieldwork and may have lowered crop quality, while Brazilian farmers are holding back sales. ICE arabica coffee inventories fell to a 2.25-year low of 332,945 bags, and robusta inventories recently touched a 2-year low before rising to a 3.5-month high.

Coffee prices surged today, with September arabica coffee up 11.00 cents to a 3.33% gain and September ICE robusta coffee up $116 to a 3.03% gain. The rally was fueled by a strengthening Brazilian real, which hit a 3.5-week high against the dollar, discouraging export sales from Brazil's coffee producers. Illiquid trading conditions, exacerbated by ICE raising margin requirements twice last week, have amplified price volatility as many commodity funds closed positions. Additionally, a delayed Brazilian coffee harvest—52% complete as of July 1 versus the five-year average of 55%—and concerns that an emerging El Niño pattern could damage next year's crop provided further support.

Coffee prices settled sharply higher on Thursday, with September arabica coffee closing up 38.10 cents, or 12.30%, and September ICE robusta coffee up $302, or 8.07%. The volatile moves come after Intercontinental Exchange raised margin requirements earlier this week, drying up liquidity and prompting many commodity funds to close positions, leading to excessive one-way price swings. Supporting prices, Brazil's 2026/27 coffee harvest is 52% complete as of July 1, behind last year's 60% and the five-year average of 55%, while forecast rain in mid-July could be detrimental to crops. ICE arabica inventories fell to a 2.25-year low of 346,419 bags on Thursday, and concerns persist that an El Niño weather pattern could hurt next year's crop, with the US NOAA estimating a 67% probability of a record-strong Super El Niño.

OptionSpreaders.com reported net performance for the first half of 2026, with the Standard Program returning 17.19% and the Advanced Program returning 18.12% for the six months ended June 30, 2026. Coffee options led the Softs sector as record prices and retail demand pushed call-side premiums far above fundamental valuations, creating favorable openings for structured option sales. Precious metals also performed well, with call option strikes in silver and gold trading at two to three times the value of underlying futures, allowing the firm to collect additional premium. In energy, fears of prolonged Middle East supply disruptions kept call options above $200 per barrel popular, but the firm's view that the Strait of Hormuz bottleneck would be temporary proved correct as WTI returned to the $60s, benefiting structured option sales. Head Options Analyst Justin Cardwell noted that fear and speculation in coffee, precious metals, and energy drove option premiums to levels difficult to reconcile with fundamentals.