September arabica coffee (KCU26) closed down 4.25 cents (-1.27%) on Monday, while September ICE robusta coffee (RMU26) fell 18 cents (-0.47%). This price drop comes as forecasts indicate dry weather in Brazil’s coffee-growing regions, which could accelerate the ongoing coffee harvest.
The recent volatility in coffee prices has been intensified by illiquid trading conditions following two margin requirement increases by the Intercontinental Exchange (ICE) for coffee futures. The latest Commitment of Traders data shows that funds increased their long positions in ICE robusta coffee by 5,607 contracts to 44,195, marking the highest number of net-long positions in over two years. Additionally, ICE arabica coffee inventories have fallen to a 2.25-year low of 342,574 bags, while robusta inventories have risen to a 3.5-month high of 4,220 lots on Monday.
Concerns surrounding an El Niño weather pattern threatening Brazil’s 2026/27 coffee crop could add bullish pressure on prices. The US Climate Prediction Center has indicated that this could be one of the most severe El Niño events in over 75 years, potentially leading to significant weather-related disruptions in coffee production across both Asia and South America.
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