Coffee futures finished Thursday with uneven direction: July arabica coffee fell 2.75 cents, or 0.99%, while July ICE robusta gained 5 cents, or 0.14%. The mixed close came after coffee prices surrendered earlier gains as the U.S. dollar index rallied to a 13-month high, prompting long liquidation in the futures market.
Over the past week, coffee prices had jumped sharply, reaching five-week highs on Thursday, supported by weather concerns in Brazil and a recent drawdown in ICE inventories. However, expectations for drier conditions later in Brazil tempered sentiment, helping explain why arabica slipped while robusta managed to hold onto gains.
Key takeaways
- Price move: July arabica coffee settled down 0.99%, while July robusta finished up 0.14%.
- Catalyst: A surge in the dollar to a 13-month high triggered long liquidation, offsetting weather-related support.
- Supply signals: ICE arabica inventories fell to a 2.25-year low, but robusta inventories rose on the day.
- Weather outlook: Rain in Brazil this week supports the market, while forecasts for mostly dry conditions next week cooled the upside.
- Implication: Near-term price action appears increasingly sensitive to day-to-day currency moves and short-cycle weather headlines.
What drove the move
According to Thursday’s trading, the dollar was the immediate headwind. Coffee prices gave up early gains after the dollar index climbed to a 13-month high, a move that can strengthen the effective pricing power of the currency and often weighs on commodities.
Weather remained the dominant longer-running theme, but it turned into a push-pull narrative. A forecast from Vaisala called for moderate to heavy rainfall across Brazil’s coffee-growing regions during the week, renewing concerns that persistent rain could delay the harvest. That support helped lift coffee earlier in the session to five-week highs.
Still, momentum faded after Climatempo suggested Brazil’s key coffee areas were expected to experience mostly dry weather next week. That shift reduced the probability of further harvest disruption in the immediate window, contributing to the weaker arabica close.
Beyond Brazil, market participants also continued to track El Niño risk. A report cited NOAA estimates a 67% probability of a “Super El Niño” this year, and Japan’s meteorological agency confirmed an El Niño pattern across the equatorial Pacific. That backdrop raises the possibility of later-season volatility—potentially including floods, droughts, and temperature swings—that could affect coffee production beyond Brazil as the year progresses.
Inventory and crop expectations
Inventory trends reinforced the mixed performance between arabica and robusta.
- Arabica: ICE arabica coffee inventories fell to a 2.25-year low of 394,267 bags on Thursday, a development that typically supports futures prices by signaling tighter available supply.
- Robusta: ICE robusta inventories fell to a 2-year low of 3,631 lots on May 15 before rising to a 2.25-month high of 4,032 lots on Thursday, which can limit upside momentum.
Crop outlooks have also been a counterbalance. Earlier in the month, the USDA’s Foreign Agricultural Service projected a record 2026/27 Brazil coffee crop of 71.9 million bags, up 14% year over year. Rabobank raised its estimate of the global arabica surplus for 2026/27 to 9.5 million bags from 7.0 million previously. Those forecasts have kept a lid on prices during periods when weather headlines cool.
In addition, Cecafe reported that Brazil’s May green coffee exports rose 4.2% year over year to 2.73 million bags, pointing to continued supply movement from the country even as near-term weather uncertainty persists.
Market signals from Vietnam and trade
For robusta, Vietnam-related data has been a recurring bearish input. Vietnam’s National Statistics Office reported that Vietnam’s 2026 coffee exports (January to May) increased 7.9% year over year to 922,000 metric tons. The same report said Vietnam’s 2025 coffee exports rose 17.5% year over year to 1.58 million metric tons.
Production expectations in Vietnam have also remained a factor. Vietnam’s 2025/26 coffee production is projected to rise 6% year over year to a four-year high of 1.76 million metric tons (29.4 million bags), which can weigh on robusta if global demand does not expand proportionately.
Supply disruptions tied to logistics were also cited as supportive. The ongoing closure of the Strait of Hormuz has disrupted global shipping, tightening coffee supply by increasing shipping rates and insurance, as well as fertilizer and fuel costs. However, the strength of the dollar and changing weather forecasts still dominated intraday trading.
At the same time, the International Coffee Organization reported that global coffee exports for the current marketing year (October to September) were down 0.3% year over year to 138.658 million bags as of its November 7 update, adding another layer of demand-related uncertainty.
Bigger picture: how investors may read the next signals
Coffee’s recent rally shows how quickly weather and inventory updates can overwhelm broader fundamentals in the short term. Thursday’s outcome suggests that currency moves—especially a stronger dollar—can reverse gains even when supply tightness is evident in arabica.
Looking ahead, traders are likely to focus on whether Brazil’s forecast shifts again, particularly as the market balances near-term rain impacts against expectations for drier conditions next week. Investors will also watch further developments in the El Niño outlook and any additional inventory data from ICE, as well as updates on global export flows from major origins such as Brazil and Vietnam.
