Coffee Futures Rebound as Brazil Rains, Tight Stocks and Conilon Concerns Reinforce Supply Risks (24 July 2026)
Coffee futures recovered on Friday, July 24, as buyers returned to both the New York arabica and London robusta markets following several sessions of substantial losses. The rebound was initially driven by technical positioning and bargain buying, but weather concerns in Brazil, historically low certified arabica inventories and weaker expectations for the Brazilian conilon crop provided additional fundamental support as the session progressed. September arabica futures on ICE Futures US closed at 313.80 cents per pound, gaining 4.40 cents, or 1.42%, after trading between 306.40 and 318.55 cents. In London, September robusta rose by $49, or 1.32%, to settle at $3,757 per metric ton after reaching an intraday high of $3,800. Despite the positive close, both markets ended the week lower, with arabica declining approximately 2.03% and robusta losing around 3.10%.
The strongest buying was concentrated in the nearby contracts, particularly September arabica, while deferred positions recorded more limited gains. This caused calendar spreads to widen considerably and indicated that concerns about short-term coffee availability remain present despite the recent decline in outright prices. The September–December arabica spread increased to approximately 15.75 cents per pound from 12.95 cents in the previous session, while the September–March spread also strengthened. In London, the September–November robusta spread widened to around $19 per ton, and the September–January spread rose to approximately $57. The stronger performance of nearby contracts suggests that the market is placing a premium on immediately available coffee, a dynamic that could become more pronounced as the September contracts approach their rollover periods. Index funds are expected to begin adjusting positions during the first part of August, while broader liquidation and rollover activity will likely intensify later in the month, potentially increasing volatility in both futures prices and spreads.
Weather developments in Brazil became one of the most important drivers of Friday’s recovery. A cold front brought heavy rainfall, strong winds and localized hail to parts of São Paulo and Minas Gerais, with some production areas reportedly receiving between 30 and 90 millimetres of rain over a relatively short period. These conditions are occurring during a critical phase of the arabica harvest and may interrupt fieldwork, increase the number of cherries falling from trees and make drying and processing more difficult. The immediate concern is not necessarily a major decline in total production volume, but rather a deterioration in bean quality. Coffee harvested during prolonged wet conditions can experience fermentation, uneven drying and other defects that reduce the volume suitable for premium export markets or exchange certification. Strong winds may also cause ripe cherries to fall before they can be collected, while hail has created additional localized risks. Rain during the harvest period can also stimulate premature and irregular flowering for the next crop, increasing uncertainty over the 2027 production cycle if the flowering is followed by insufficient moisture later in the season.
The impact of the rainfall is particularly significant because certified arabica inventories are already extremely tight. ICE Futures US certified stocks fell to 311,317 bags on Friday and are approaching levels last recorded near the historical lows of 1999. There were also no bags awaiting certification for a twelfth consecutive session, limiting the possibility of an immediate recovery in deliverable supply. Brazil currently represents only a small share of certified inventories, with fewer than 10,000 Brazilian bags held in the system. Expectations that freshly harvested Brazilian coffee could replenish exchange stocks may therefore prove difficult to realise if wet weather reduces bean quality. European green coffee inventories also remain constrained, with stocks at the main European ports estimated at approximately 6.8 million bags at the end of June, around 3.6% below the previous year. Robusta inventories have shown some improvement, with certified stocks in London rising to around 4,254 lots, their highest level in four months, but this increase has not been sufficient to eliminate concerns over nearby availability.
Further support for robusta came from deteriorating expectations for Brazil’s conilon crop. Cooabriel, one of the country’s largest conilon cooperatives, estimates that production in the regions it monitors could decline by between 25% and 30% during the 2026/27 season. The harvest has progressed more slowly than expected, and results from farms where collection is already more advanced reportedly confirm significantly lower output. The situation is especially important because Espírito Santo is responsible for approximately two-thirds of Brazil’s conilon production. A substantial decline in the state would affect domestic availability, soluble coffee production and Brazil’s capacity to maintain elevated robusta exports. These concerns are developing while the main Asian robusta-producing countries are in their seasonal off-period, and traders are also monitoring persistent heat in Vietnam. Together, these factors help explain why London robusta attracted buying interest after briefly falling below $3,700 per ton.
The Brazilian physical market remained relatively quiet despite strong buying interest from exporters and domestic processors. Large daily movements on the futures exchanges have made it difficult for buyers and sellers to agree on replacement values, and producers have generally resisted weaker bids while waiting for greater clarity on the market’s direction. Most sales appear to be limited to volumes required to meet immediate financial or delivery commitments rather than reflecting broad producer selling. The widening difference between high- and lower-quality coffee may become increasingly important if rainfall reduces the proportion of export-grade beans. In that scenario, a larger share of lower-quality coffee could be redirected toward the domestic market, while premium beans suitable for export become scarcer and command stronger differentials. Brazilian shipments were running at around 2 million bags as of July 24, including approximately 1.25 million bags of arabica and more than 530,000 bags of robusta. The pace was slightly ahead of the equivalent stage in June.
Demand risks were also reduced by confirmation that Brazilian coffee would be excluded from additional US tariffs connected to Section 301 investigations. The exemption protects access to the United States, the world’s largest coffee-consuming market, and removes a potential threat to approximately $2.5 billion in annual Brazilian coffee exports. Although the announcement did not immediately generate substantial additional activity in Brazil’s physical market, it provides greater certainty for exporters and helps preserve one of the country’s most important trade relationships. The Brazilian real remained relatively stable against the US dollar during the session, meaning currency movements had only a limited influence on local pricing and producer behaviour.
The latest Commodity Futures Trading Commission report showed that managed-money participants slightly reduced their net-long arabica position during the week ending July 21. Large funds held approximately 26,034 net-long futures positions, consisting of 46,670 long contracts and 20,636 short contracts. The decline in the net-long position resulted primarily from the liquidation of existing long exposure, while short positions were also reduced. This suggests that funds were lowering their overall market exposure rather than establishing a substantially more bearish position. The current structure leaves coffee vulnerable to sharp movements in either direction. Additional long liquidation could place renewed pressure on prices if weather conditions improve, but the relatively limited number of speculative short positions means that adverse crop or inventory developments could quickly attract buyers back into the market.
Geopolitical tensions in the Middle East continued to influence expectations for freight costs, energy prices and shipping routes, although their immediate impact on coffee remained secondary to weather and inventory developments. Disruptions affecting maritime corridors such as the Red Sea, the Bab al-Mandab Strait or the Strait of Hormuz could increase the cost and duration of coffee shipments to Europe and Asia. These risks are particularly relevant for robusta because a substantial share of global supply moves from Vietnam and other Asian origins toward European processing centres. Oil prices declined sharply on Friday after advancing earlier in the week, temporarily reducing pressure on freight and processing costs, but the broader geopolitical situation remains uncertain and could quickly return as a significant market factor.
Friday’s rally should therefore be viewed primarily as a recovery from oversold conditions rather than definitive confirmation of a new upward trend. Arabica remains below its recent highs and faces important technical resistance around 319 to 320 cents per pound. A sustained move above this area could open the way toward approximately 325 cents and potentially the low-330s. Initial support is located near 307 cents, followed by the psychological level of 300 cents per pound. A break below 300 would weaken the technical structure and could encourage another round of speculative liquidation. For robusta, $3,800 remains the immediate resistance level. September tested this area on Friday but was unable to establish a convincing move above it. The recovery above $3,750 is nevertheless constructive, particularly alongside stronger nearby spreads.
The principal factors to monitor during the coming sessions will be rainfall across Brazil, the pace and quality of the arabica harvest, updated conilon production estimates, ICE-certified inventory movements and the approaching September rollover period. Tight stocks, uncertain crop quality and cautious producer selling leave the market exposed to sudden upward adjustments, while the negative weekly performance in both New York and London demonstrates that technical selling and speculative liquidation remain important risks. Coffee futures are therefore likely to remain highly volatile, with short-term weather and availability carrying greater influence than broader estimates of global production.
