Daily Coffee Report 10/28/26
Daily coffee report
StoneX Coffee Team
- Coffee
Honduras Drought Raises Questions for 2026/27 Coffee Crop as El Niño Concerns Intensify
Alexis Rubinstein
Managing Editor - Coffee Network
CoffeeNetwork (New York) - Recently, coffee market participants are beginning to pay closer attention to weather developments in Central America, where expanding drought conditions in Honduras are raising concerns about the development of the country's next coffee crop.
While there is not yet widespread evidence of significant coffee crop losses, the timing of the drought is attracting attention because producers are currently moving through key developmental stages that will determine the size and quality of the 2026/27 harvest. At the same time, government agencies, humanitarian organizations, and weather forecasters are warning that El Niño-related dryness could intensify during the months ahead.
The situation has become serious enough that the Honduran government recently declared a drought-related state of emergency covering 75 municipalities after conditions deteriorated across large parts of the country. According to the United Nations Office for the Coordination of Humanitarian Affairs (OCHA), the declaration followed worsening drought conditions linked to El Niño, with additional municipalities placed under yellow and green alerts. OCHA estimates that approximately 1.8 million Hondurans could face crisis-level or worse food insecurity between August and October if conditions persist.
Although the emergency declaration was primarily driven by concerns over food production and rural livelihoods, coffee traders are increasingly asking whether the drought could begin affecting one of Central America's largest arabica producers.
Honduras has already completed the majority of its 2025/26 harvest and growers are now focused on the development of the upcoming crop. Across the country's coffee belt, producers are monitoring fruit set, cherry development, and overall tree health, all of which depend heavily on adequate soil moisture and timely rainfall.
Agronomists note that prolonged dryness during this stage can have several consequences. Water stress may reduce cherry retention, diminish bean filling, and ultimately decrease bean size at harvest. If moisture deficits become severe, trees may shed cherries to preserve vegetative growth. Even where outright losses do not occur, drought conditions can contribute to uneven maturation and reduced cup quality.
The concern is amplified by forecasts calling for a strengthening El Niño pattern during the second half of 2026. Historically, El Niño events have brought reduced rainfall to portions of Central America's Pacific-facing regions while contributing to prolonged drought across parts of the region's so-called Dry Corridor.
According to USDA and IHCAFE data, Honduran coffee production is concentrated in six major regions: Copán, Montecillos, Opalaca, Comayagua, El Paraíso, and Agalta. These high-altitude regions account for the overwhelming majority of the country's arabica output and form the backbone of Honduras' export-oriented coffee sector.
Among them, El Paraíso is attracting particular attention. The department has been identified within international drought-monitoring programs and is one of the areas included in anticipatory drought-response frameworks developed by the United Nations and Honduran authorities. The region is also one of the country's most important coffee-producing zones.
Should rainfall deficits persist through September and October, market participants may begin reassessing production assumptions for several key coffee-growing departments.
Despite growing weather concerns, official coffee production forecasts have not yet been revised downward. USDA's latest Coffee Annual report projects Honduran production at 6.03 million 60-kilogram bags in marketing year 2026/27, up from an estimated 5.53 million bags in 2025/26. The forecast cites improved plant nutrition programs, expansion of productive coffee area, enhanced pruning and crop management efforts, and the maturation of newer plantings as key drivers of growth. The report also highlights the increasing adoption of Parainema and other rust-resistant varieties while noting ongoing support from IHCAFE to improve productivity and sustainability across the sector.
However, the USDA assessment was completed earlier in the year, before the most recent escalation in drought concerns. As a result, traders are watching closely to determine whether weather conditions ultimately align with current production expectations.
"The market is facing a familiar challenge," one regional exporter told CoffeeNetwork. "Production forecasts often look comfortable until weather becomes a sustained issue. Right now, everyone is watching rainfall."
Even if overall production remains near current projections, prolonged dryness could still create challenges. Smaller bean sizes could affect exportable yields. Stress on coffee trees may increase susceptibility to pests and disease pressures. In addition, insufficient rainfall during key developmental stages can have lingering effects on future flowering potential and the subsequent production cycle.
These concerns come at a time when coffee markets are already balancing a wide range of weather-related risks across producing countries.
For now, evidence of widespread coffee crop damage in Honduras remains limited, and official forecasts continue to point toward growth in the coming season. Nevertheless, the combination of expanding drought conditions, El Niño concerns, and the crop's sensitive developmental stage suggests that Honduras may be entering its first major weather test of the 2026/27 cycle. The coming weeks will likely prove critical in determining whether current rainfall deficits remain a manageable agronomic challenge or develop into a more significant production story.
Alexis Rubinstein
Sources: USDA, IHCAFE
- Coffee
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