MILAN – Coffee markets are back on the rollercoaster, rising again after Friday’s nosedive. Yesterday, Monday 23rd September, both exchanges regained altitude and came closer to last week’s highs. In New York, the Ice Arabica’s December contract gained almost 13 cents (+1,290 points; +4.7%) to close at 263.65, not far from the highs of the September 18th.
In London, the contract for November delivery rose 4% (+$217) to settle at $5,276.
Yesterday’s rebound completely offset last Friday’s sharp falls, when London and New York lost $189 and $1,090 respectively.
Last Friday’s sell-off in both coffee markets was triggered by weather forecasts from Brazil, with models were predicting rain later in the week.
Early spring rains are crucial to to stimulate flower blooming of the Arabica trees in the coffee belt.
However, the forecasts do not seem to be coming true this week: rainfall remains sporadic and has done little to alleviate the severe water stress in the plantations.
According to the National Meteorological Institute (Inmet), September will end without any significant new rain accumulations in the south-east, north-east and central-west of the country.
What is the impact on the crop so far?
“We know for sure that there has already been damage – and not insignificant damage – to the formation of Brazil’s 2025/26 crop,” wrote Escritório Carvalhaes in a note last week. “If the rains become more regular, the damage will be reduced, but it will certainly not be possible to recover what has already been lost,” the Santos-based broker added.
Meanwhile, various international media reports paint an alarming picture of the unprecedented drought that has hit Brazil.
The situation has been exacerbated by fires that have broken out across the country, some of them man-made.
For example, Agence France-Presse reports that a fire near the town of Caconde in the state of São Paulo has affected more than 500 hectares of land, 15% of which are coffee plantations.
The weather situation in Vietnam is also becoming increasingly complex.
News from the producing areas about the impact of Typhoon Yagi’s passage remains fragmentary.
Euronews claims on its website that “thousands of hectares of coffee plantations have been affected, with significant losses to both the current crop and future production potential”.
Bloomberg notes that Vietnam’s coffee belt was already experiencing wet weather in August, but the downpours that happened in the aftermath of Typhoon Yagi, which made landfall in the north of the country on Sept. 7, drenched coffee plantations even further.
The arrival of La Niña could bring more rain, slowing and complicating the harvest and delaying the shipment of Vietnam’s much-anticipated new crop until early December or even later, according to Daryl Kryst, assistant vice president, commodity execution and sales at StoneX.
“We do expect (robusta) prices to ease off, but that may not be seen until the start of next year,” Kryst told Bloomberg.
Beyond the weather, Vietnam’s commodity sector faces two major long-term challenges. The first is the shrinking of coffee acreage due to farmers switching to alternative crops like durian and avocados over the last few years.
The second is the depletion of groundwater, which is crucial as coffee farming in Vietnam relies on wells for irrigation.
