Coffee Prices Show Continued Volatility

Coffee prices continued to demonstrate extreme volatility over the past week. Upward pressure and short-term swings have been fueled by falling global inventories, supply concerns and shipping disruptions. Earlier this week, Arabica prices surged, hitting a multi-week high, as traders reacted to a slower-than-expected harvest in Brazil in combination with logistical worries following the recent earthquake in Colombia.

Prices have since come down slightly, thanks to drier weather in Brazil and reassuring developments in Colombia.

Good News From Brazil

Last month, Brazil’s largest co-op, Cooxupe, reported that Brazil’s harvest had slowed to 23 percent of what it had been the year prior. This created insecurity among traders, leading to a series of price spikes. However, Cooxupe reported today that drier weather has allowed the harvest in Brazil to accelerate. And while still down slightly from last year, the current harvest is 81.1 percent complete.

In the country’s main Arabica-producing region, Minas Gerais, 0.6 mm of rain was reported by Somar Meteorologia for the week ending Aug. 16. This represents 11 percent of the historical average for the region. This news has caused coffee prices to drop significantly.

Uncertainty in Colombia

Another major factor contributing to increased coffee prices over the last week was the disruption caused by Colombia’s 7.4 magnitude earthquake. Several of the country’s major coffee-growing regions were affected, including Caldas and Risaralda. These two provinces alone account for roughly 25 percent of Colombia’s Arabica production.

Uncertainty swirled as inspectors assessed the damage to the port of Buenaventura, which handles most of Colombia’s coffee exports. And while it was reported by Bloomberg on Thursday that Buenaventura had reopened, surrounding road damage means much traffic is unable to reach the port.

Rising Exports From Vietnam

While Arabica prices rose due to falling inventories, rising inventories of Robusta coffee could lead to lower prices. Current ICE Robusta inventories are the highest they have been for almost six months. Moreover, the world’s largest Robusta producer, Vietnam, has recorded historically high exports, which is bearish for Robusta prices. According to the country’s National Statistics Office, Vietnam coffee production will reach a four-year high of 29.4 million bags for 2025/26.

Super El Niño Concerns

The US Climate Prediction Center has confirmed that there is a 90 percent chance that a so-called Super El Niño weather pattern will develop during the latter part of this year. Expected to last for up to 12 months, the resulting disruption to normal weather patterns could have a devastating effect on coffee production in South America and Asia.

Uncertainty surrounding whether this could cause drought in Brazil as the new crop is developing is partly responsible for the current Arabica coffee price volatility. As for Robusta, the El Niño weather pattern could have an even stronger effect on crop development, leading to severely reduced yields.