Arabica coffee falls to 250 cents per pound by December 31, 2026 in the base case, 220 cents in the bear case, and 360 cents in the bull case, as Brazil’s record 71.9-million-bag 2026/27 harvest converts a two-and-a-half-year low in exchange stocks into the first meaningful global surplus in three seasons.

September ICE arabica settled at 319.50 cents per pound on August 3, 2026, down 3.79% on the day, after Somar Meteorologia reported zero rain in Minas Gerais in the week ended August 2 — weather that finally lets a delayed harvest catch up (Barchart, August 3, 2026). This note argues the July squeeze was a timing artifact, not a structural deficit.

Key Levels:

• Asset: Arabica coffee (ICE Coffee C), September futures settled 319.50 cents/lb on August 3, 2026 — ICE settlement data via Barchart
• Base case target: 250 cents/lb by December 31, 2026 — Rabobank’s 9.5-million-bag 2026/27 arabica surplus repricing the curve as Brazilian supply reaches ports
• Bull case target: 360 cents/lb — fires if the US Climate Prediction Center’s 81% October–December El Niño probability materialises as a strong event and delays the September–October flowering rains in Minas Gerais
• Bear case target: 220 cents/lb — Rabobank’s scenario of arabica futures falling by roughly a third by late 2026, applied to the July 31 settlement of 332.10 cents
• Major support: 277 cents/lb — the late-June congestion zone where futures based after the 19-month low (StoneX Coffee Network, June 25, 2026)
• Major resistance: 348.55 cents/lb — the July 9, 2026 spike high printed during the El Niño short-covering rally
• Invalidation level: a weekly close above 350 cents/lb — above the weather-scare high, the surplus-repricing thesis is wrong on timing and probably on substance

Methodology: what this call is built on

Price data are ICE settlements for September arabica (KCU26) and September robusta (RMU26) through August 3, 2026, as reported by Barchart. Inventory data are ICE certified stocks through July 31, 2026. Harvest progress comes from Safras & Mercado (July 17 report) and the Cooxupe cooperative (July 24). Supply-and-demand estimates are from the United States Department of Agriculture’s Foreign Agricultural Service (USDA FAS, June 3 forecast), Rabobank and StoneX. The lookback window is June 1 to August 3, 2026. Two caveats: 2026/27 surplus estimates were published before Brazil’s September–October flowering, and small daily percentage changes make some derived settlement levels approximate to within a few cents.

The data: a squeeze in the front, a surplus in the deferreds

Arabica coffee traded at 319.50 cents per pound on August 3, 2026 because near-term physical tightness is colliding with a comfortable 2026/27 supply outlook. ICE-certified arabica inventories fell to 264,179 bags on July 31, 2026, their lowest level in two and a half years, according to exchange data reported by Barchart. At the same time, Brazil’s 2026/27 harvest was only 64% complete as of July 15, against 77% a year earlier and a five-year average of 70%, per Safras & Mercado. Traders are paying up for coffee that is available now, while sellers of deferred contracts lean on a record incoming crop: USDA FAS projects Brazil’s 2026/27 output at 71.9 million bags, up 14% year on year. The result is a market where certified stocks set the price today and the surplus sets the price for December.

Indicator	Latest reading	Prior reading	Change
September arabica (KCU26)	319.50 cents/lb (Aug 3, 2026)	309.80 cents/lb (Jul 8, 2026)	+3.1%
September robusta (RMU26)	$3,856/MT (Aug 3, 2026)	$3,650/MT (Jun 25, 2026)	+5.6%
ICE certified arabica stocks	264,179 bags (Jul 31, 2026)	346,419 bags (Jul 9, 2026)	-23.7%
Cooxupe harvest progress	58.3% (Jul 24, 2026)	67% (Jul 24, 2025)	-8.7 pp
Vietnam coffee exports, Jan–Jul	1.31 MMT (2026)	1.08 MMT (2025)	+21.1%

Sources: ICE settlement and certified-stock data via Barchart (August 3, 2026); Cooxupe cooperative harvest reports; Vietnam customs data via Barchart. Time window: June 25 – August 3, 2026.

“A much more comfortable balance for 2026/27, as increased Brazilian arabica production will translate into a significant global surplus.”

— Carlos Mera, Head of Agri Commodities Markets Research, and Stephen Rannekleiv, analysts at Rabobank, on the basis for their long-term outlook
(DatamarNews)

The mechanism: why a record crop beats a stock squeeze by December

The bearish mechanism runs in three steps. First, the harvest catches up. The July delay was rain-driven — 32.4 mm fell in Minas Gerais in the week ended July 26, roughly 2,700% of the historical average — but the week ended August 2 was completely dry, and fieldwork is accelerating. Second, certified stocks rebuild. Brazil’s 71.9-million-bag crop has to move through ports and graders between September and December, and Rabobank estimates the global 2026/27 arabica surplus at 9.5 million bags, raised from 7.0 million. StoneX puts the total global surplus near 10 million bags, against a 1.8-million-bag surplus in 2025 and deep deficits in 2024. Third, the front-month scarcity premium unwinds: once exchange stocks stop falling, the marginal buyer no longer pays up for immediacy. Rabobank’s published path — arabica futures down by about a third by the end of 2026 — implies roughly 220 cents off the July 31 close; our base case of 250 cents assumes restocking demand from roasters absorbs part of the surplus.

The steelman for the other side is genuine: this is the same market that printed a 12.3% single-day rally to 347.90 cents on July 9 on El Niño fears and short covering, and certified stocks at 264,179 bags leave no buffer if the new crop is slow to certify.

What the model misses

El Niño is the single largest risk to the bearish case for arabica in late 2026. The US Climate Prediction Center put the probability of El Niño conditions during October–December 2026 at 81%, as reported on July 9, 2026. In Brazil, a strong El Niño can delay the September and October rains that trigger coffee-tree flowering, and the 2027/28 crop is set in exactly that window. A failed or uneven flowering would not shrink the record 2026/27 harvest now being gathered, but it would force the market to price a return to deficit one season ahead — the same dynamic as July 2021, when frost damage to a crop still 12 months from harvest drove arabica up more than 30% in under a month on ICE. That is why a weather scare can overwhelm a surplus that exists only on paper until the coffee is graded.

The framework also ignores currency: a sharp Brazilian real rally would slow farmer selling at any futures price, and surplus estimates assume normal export logistics through Santos.

“The strength of the developing El Niño event is likely to become the single most important driver of coffee prices in the months ahead.”

— Albert Scalla, Senior Vice President of Trading, StoneX, speaking at a Brazilian Rural Society (SRB) coffee meeting
(CocoaIntel, July 9, 2026)

What would invalidate this call

The base case to 250 cents breaks if ANY ONE of these four signals fires:

• Somar Meteorologia shows Minas Gerais rainfall below 50% of the historical average through September 30. Flowering for 2027/28 happens in September–October; a dry flowering window converts next season’s surplus into a feared deficit and re-rates the whole curve higher.
• ICE certified arabica stocks are still below 300,000 bags on October 1, 2026 with the harvest more than 90% complete. That would mean the record crop is not reaching the exchange — because of quality failures from July’s harvest rains or logistics — and the scarcity premium persists.
• A weekly close above 350 cents per pound. That is above the July 9 weather-spike high of 348.55; holding above it would signal the market has moved from pricing a squeeze to pricing a structural shortage.
• USDA FAS or Rabobank cut the Brazil 2026/27 estimate below 67 million bags in autumn revisions. The surplus is roughly 9.5 million bags; a five-million-bag downgrade removes most of it and with it the bearish mechanism.

What to watch next

Four dates and datasets matter between now and year-end. The Climate Prediction Center’s monthly ENSO updates (mid-August, mid-September) will confirm or fade the 81% El Niño probability. Safras & Mercado and Cooxupe weekly harvest reports should show Brazil approaching completion by early September — watch whether quality downgrades from July’s rain appear. ICE certified stocks are the thesis scoreboard: the base case needs the 264,179-bag low to mark the bottom, with rebuilding visible by October. Finally, Vietnam’s new robusta harvest starts arriving from October; production is already projected at a four-year high of 29.4 million bags for 2025/26, and a strong new crop would drag the whole coffee complex lower, as our copper inventory-glut call found when exchange stocks turned.

Frequently asked questions

Why are coffee prices so high in August 2026?

Exchange stocks and harvest timing. ICE certified arabica inventories fell to 264,179 bags on July 31, 2026, the lowest in two and a half years, while Brazil’s harvest ran 13 percentage points behind last year’s pace after heavy July rain in Minas Gerais. Buyers needing coffee now are bidding against a shrinking certified pool, even though the incoming crop is a record.

What is the coffee price forecast for the end of 2026?

This analysis targets 250 cents per pound for ICE arabica by December 31, 2026, with a bear case of 220 cents. Rabobank projects a 9.5-million-bag global arabica surplus for 2026/27 and expects futures to fall by roughly a third by late 2026. StoneX sees a total surplus near 10 million bags. The bull case, 360 cents, requires an El Niño flowering failure in Brazil.

Will El Niño push coffee prices higher?

It is the main upside risk. The US Climate Prediction Center assigned an 81% probability to El Niño conditions in October–December 2026. A strong event can delay the September–October rains that trigger flowering for Brazil’s 2027/28 crop. Albert Scalla of StoneX called the developing El Niño “the single most important driver of coffee prices in the months ahead”. A dry flowering window would invalidate the bearish case.

How does Vietnam’s robusta crop affect arabica prices?

Cheap robusta caps arabica because roasters substitute between the two in blends. Vietnamese production for 2025/26 is projected at a four-year high of 29.4 million bags, up 6% year on year, and January–July 2026 exports rose 21.1% to 1.31 million tonnes. A strong October harvest would pressure robusta and, through blend substitution, arabica.

What would make this forecast wrong?

Four observable signals: Minas Gerais rainfall below half its historical average through September 30; ICE certified stocks still under 300,000 bags on October 1 despite a near-complete harvest; a weekly close above 350 cents per pound; or a downgrade of Brazil’s 2026/27 crop below 67 million bags by USDA FAS or Rabobank. Any one of these fires the bull case instead.

For more of our commodity market calls, see the uranium term-price convergence thesis, the silver ratio-compression case and the gold real-rate case.

This article is informational analysis only and is not financial, investment, or trading advice. Foreign-exchange, commodity, and equity markets are highly volatile and can lose substantial value rapidly. Leveraged products carry total-loss risk and may exceed the initial margin posted. Past performance and historical correlations do not guarantee future results. Do your own research and consult a regulated financial adviser before making any investment decision.