On Tuesday, September arabica coffee (KCU26) closed down $32.35 (-9.24%), while September ICE robusta coffee (RMU26) fell $172 (-4.25%). This decline follows a significant rally on Monday, attributed to overbought market conditions and technical selling, exacerbated by the Intercontinental Exchange’s increased margin requirements for coffee futures trading.
As of July 1, Brazil’s coffee harvest is 52% complete, lagging behind last year’s 60% and the five-year average of 55%, according to Safras & Mercado. Forecasts indicate possible detrimental rain in Brazil mid-July, with the NOAA predicting a 67% chance of a “Super El Niño,” which could impact coffee production significantly in the coming months.
ICE arabica coffee inventories have fallen to a 2.25-year low of 362,466 bags. Meanwhile, Vietnam’s coffee exports from January to June rose 7.3% year-on-year to 1.05 million metric tons, contributing bearish pressures on robusta prices.
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