Author: Qahwa World |
Date: June 19, 2026
Dollar Strength Weighs on Coffee Prices, Capping Gains Despite Brazil Harvest Delays
Key Takeaways:
- Arabica prices closed down 0.99% as the dollar index surged to a 13-month high, triggering long liquidation in coffee futures.
- ICE arabica inventories fell to a 27-month low of 394,267 bags.
- Rainfall expected in Brazil could delay the harvest, but next week may bring dry weather to key coffee regions.
- El Niño concerns support prices, with a 67% chance of a “Super El Niño” this year.
- USDA forecasts a record Brazil 2026/27 crop of 71.9 million bags (+14% y/y).
- Vietnam’s exports rose 7.9% in the first five months of 2026, with production expected at 29.4 million bags (+6%).
- Strait of Hormuz disruptions continue to support prices through higher shipping and insurance costs.
Coffee prices closed mixed on Thursday, giving up early gains as the dollar index surged to a 13-month high, triggering a wave of long liquidation in coffee futures. July arabica futures fell 0.99%, while July robusta futures edged up 0.14%.
Prices had rallied sharply over the past week, reaching five-week highs amid concerns that persistent rain in Brazil would delay the coffee harvest. However, gains faded after meteorologist Climatempo said Brazil’s key coffee-growing regions are expected to see mostly dry weather next week.
Dollar and Weather Determine Price Direction
The dollar index rose to a 13-month high, making dollar-denominated commodities more expensive for holders of other currencies and triggering selling in coffee futures. On the weather front, forecaster Vaisala expects moderate to heavy rainfall across Brazil’s coffee-growing regions this week, which could delay the harvest and reduce immediate supplies. However, Climatempo’s forecast of dry weather next week eased some concerns.
Exchange Inventories at Multi-Year Lows
ICE arabica coffee inventories fell to 394,267 bags on Thursday, the lowest level in 27 months. This decline in inventories supports prices and reflects tight physical supplies. In contrast, ICE robusta inventories jumped from a two-year low of 3,631 lots on May 15 to 4,032 lots, the highest level in 2.25 months.
| Indicator | Value | Significance |
|---|---|---|
| July Arabica Futures | -0.99% | Decline pressured by dollar strength |
| July Robusta Futures | +0.14% | Slight gain |
| ICE Arabica Stocks | 394,267 bags | 27-month low |
| ICE Robusta Stocks | 4,032 lots | 2.25-month high |
| Dollar Index | 13-month high | Pressure on commodities |
El Niño Concerns Support Prices and Threaten Next Year’s Crop
Concerns over the impact of an El Niño weather pattern on Brazil’s next coffee crop continue to support prices. Coffee trader Commercial warned that El Niño could delay the arrival of seasonal rains during Brazil’s critical flowering period in September and October, potentially damaging the 2026/27 crop. The US National Oceanic and Atmospheric Administration (NOAA) estimates a 67% probability of a “Super El Niño” this year, which could be the strongest on record. The Japan Meteorological Agency confirmed that El Niño conditions have formed across the equatorial Pacific, setting the stage for months of floods, droughts, and temperature fluctuations that could hinder coffee production in Asia and South America.
Large Crops Continue to Weigh on the Market
Despite recent gains, the broader market remains under pressure from expectations of abundant coffee supplies. On June 3, the USDA’s Foreign Agricultural Service (FAS) projected Brazil’s 2026/27 coffee production at a record 71.9 million bags, up 14% from the previous year. Rabobank also increased its forecast for the global arabica surplus in 2026/27 to 9.5 million bags, up from 7 million bags previously. In addition, Cecafé reported that Brazil’s green coffee exports rose 4.2% year-on-year in May to 2.73 million bags.
Vietnam Expands Exports and Production, Adding Pressure
Vietnam, the world’s largest robusta producer, continues to increase exports, adding further pressure on prices. According to Vietnam’s National Statistics Office, coffee exports during the first five months of 2026 reached 922,000 metric tons, up 7.9% from the same period a year earlier. Full-year exports in 2025 rose 17.5% to 1.58 million metric tons. Vietnam’s 2025/26 coffee production is also expected to increase by 6% year-on-year to 1.76 million metric tons, equivalent to approximately 29.4 million bags.
Strait of Hormuz Disruptions Continue to Support Prices
Ongoing geopolitical tensions in the Strait of Hormuz continue to disrupt global coffee supplies and support prices. The closure has tightened supplies by raising shipping rates, insurance premiums, fuel costs, and fertilizer prices, increasing costs for importers and roasters. This geopolitical factor adds an additional layer of support to prices amid continued instability in the region.
Global Production Outlook and Inventories Point to a Delicate Balance
The International Coffee Organization (ICO) reported that global coffee exports during the current marketing year (October–September) totaled 138.66 million bags, slightly down 0.3% from the previous year. Meanwhile, the USDA’s FAS projects global coffee production in 2025/26 to reach a record 178.85 million bags, up 2% year-on-year. The forecast includes arabica production of 95.52 million bags (-4.7%) and robusta production of 83.33 million bags (+10.9%). The USDA estimates Brazil’s 2025/26 coffee crop at 63 million bags, down 3.1% from the previous year, while Vietnam’s production is expected to rise 6.2% to 30.8 million bags. Global ending stocks are forecast to decline by 5.4% to 20.15 million bags in 2025/26, compared with 21.31 million bags in 2024/25.
| Indicator | 2025/26 | Year-on-Year Change |
|---|---|---|
| Global Coffee Production | 178.85 million bags | +2.0% |
| Arabica Production | 95.52 million bags | -4.7% |
| Robusta Production | 83.33 million bags | +10.9% |
| Ending Stocks | 20.15 million bags | -5.4% |
Frequently Asked Questions About Coffee Price Movements
Q: Why did arabica prices decline despite concerns over Brazil harvest delays?
A: Due to the dollar index surging to a 13-month high, triggering long liquidation in futures contracts, combined with forecasts of dry weather in Brazil next week.
Q: How does El Niño affect coffee prices?
A: El Niño could delay flowering rains in Brazil during September-October, potentially damaging the 2026/27 crop and supporting higher prices.
Q: How do Vietnam’s exports influence prices?
A: Rising Vietnamese exports increase robusta supply, which puts downward pressure on prices.
Q: What is the current level of exchange inventories?
A: ICE arabica stocks fell to 394,267 bags (a 27-month low), while robusta stocks jumped to 4,032 lots (a 2.25-month high).
Q: Will prices continue to be volatile?
A: Yes, with continued tension between supportive factors (harvest delays, El Niño concerns, falling inventories) and bearish factors (dollar strength, record crop expectations, rising Vietnamese production).
The coffee market remains caught between immediate bullish factors (harvest delays, falling inventories, El Niño risks) and structural bearish factors (dollar strength, record crop expectations, rising Vietnamese production and exports). The dollar’s surge to a 13-month high adds an additional layer of complexity, making commodities more expensive for holders of other currencies. All eyes remain on weather developments in Brazil and dollar movements to determine the next direction for prices.
Prepared and edited by: Qahwa World – Based on a Barchart report by Rich Asplund (adapted).
All rights reserved. Republication with attribution permitted.
Publication date: June 19, 2026
