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Arabica Futures Fall On Expectations of Global Coffee Surplus

By: Diana Delgado, Contractor

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Arabica Futures Fall On Expectations of Global Coffee Surplus

Arabica prices on the InterContinental Exchange were trading 5.25 lower for the July contract, last seen at 275.45 amid expectations of a massive production from Brazil, the world’s largest coffee-producing nation, which may result in a global coffee surplus of about 10 million bags of 60-kg, a coffee trader said.

It traded as high as 280.75 and low as 274.50.

The Robusta market is also reversing gains, falling $78 per tonne at $3,482 per tonne.

Although the coffee harvest of the 2026/27 harvest in Brazil advances slowly in early May, with many crops still showing a high percentage of green beans and with uneven maturation, according to Cepea researchers,  Brazil is set to produce a massive output of beans.

 The primary driver behind this sustained weakness is the growing consensus around a significantly larger Brazilian crop for the 2026/27 cycle. Forecasts across the market suggest output could reach between 70 and 75 million bags, supported by favorable weather, an “on-year” in the biennial cycle, and expanded producer investment following the high-price environment of recent years.

Harvest conditions in Brazil have thus far reinforced these expectations. Dry weather across key producing regions has facilitated early picking and improved the outlook for both yield and quality, further embedding a bearish tone into futures markets. 

The July market also falls as the Brazilian Real depreciated strongly yesterday, which led to a sold out among some coffee exporters, who took advantage of a weaker Real to pocket higher gains.

IN today’s news, the National Oceanic and Atmospheric Administration, NOAA said, El Niño is likely to emerge soon (82% chance in May-July 2026) and continue through Northern Hemisphere winter 2026-27 (96% chance in December 2026 – February 2027),

According to latest diagnostics call for a transition to ENSO-neutral conditions continued, as indicated by near-average sea surface temperatures (SSTs) in the east-central equatorial Pacific Ocean. The latest weekly Niño-3.4 index value was +0.4°C, with the westernmost (Niño-4) and easternmost (Niño-1+2) indices at +0.5°C and +1.0°C, respectively.

While confidence in the occurrence of El Niño has increased since last month, there is still substantial uncertainty in the peak strength, NOAA added.

In Colombia, the increased chances of El Nino arriving earlier than initially projected has heightened the alarms of both the agricultural and the electricity sector.

Colombia is currently experiencing a heatwave. In the electricity sector, the shortfall of natural gas would likely lead to an electricity rationing, and blackouts if droughts reduce water levels for power generation, the head of thermal power generators' association Andeg, Alejandro Castaneda, said.

In the agricultural sector, the National Federation of Coffee Growers announced that, together with the government, it will invest COP50 billion ($13.8 million) to support coffee fertilization ahead of the expected arrival of the El Niño weather phenomenon.

Coffee usually benefits from high luminosity and warmer weather leading to water stress that prompts the appearance of the flowering season. Yet forest fires could destroy once and for all coffee plantations. In Peru and Ecuador, El Niño brings torrential rainfall that could destroy roads and hit access to ports, leading directors of coffee exporting associations in those nations told Coffee Network.

The Dow Jones Industrial Average rose 350 points to 50,142 as US President Donald Trump met his Chinese counterpart today, with a ceremony welcoming Trump to the Great Hall of the People amid great fanfare.

By Diana Delgado

 

  • Coffee

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