Rains in Brazil: a new challenge for the coffee market
- With El Niño now active and gaining strength, the coffee market faces a new challenge. Beyond the potential impacts in regions such as Central America and Southeast Asia, the event is also likely to bring increased rainfall to Brazil during the winter.
- Rainfall has already picked up in Brazil in June, not only delaying the harvest but also affecting bean quality, which could trigger movements in differentials in the coming weeks.
- Fears of limited supply from Brazil – especially at a time when other origins are in their offseason – have supported prices and widened the September–December spreads.
- While short-term supply remains a concern, stocks at destination markets are still low. ICE-certified stocks also continue to decline, particularly for Arabica.
Rains in Brazil: a new challenge for the coffee market
In Brazil, higher precipitation levels are likely to persist throughout the winter, while spring and summer could be hotter, potentially putting pressure on the development of the 2027/28 crop.
Brazil: Arabica Harvest Pace (%)
Source: Safras & Mercado
Brazil: Robusta Harvest Pace (%)
Source: Safras & Mercado
Growing concerns over delays in Brazilian coffee reaching the market, along with the lower-than-expected availability of higher-quality beans in the near term, have supported prices both locally and internationally.
These short-term concerns are also being reflected in the spreads structure, which has increased significantly in recent days, particularly the September–December Arabica spread. The September–November Robusta spread has also increased slightly but remains below levels seen in past seasons, as the main impacts of El Niño are expected to materialize more in the medium to long term.
CCSR/IRI ENSO Strength Categories (%, June, 2026)
Source: CCSR/IRI
Arabica: September-December Spread (c/lb)
Source: LSEG, Hedgepoint
As the Brazilian harvest approaches its peak - despite delays - the volume of beans affected by rainfall is becoming increasingly significant, with quality concerns coming more clearly into focus. Adverse weather is also slowing the drying process, especially in Arabica regions, impacting beans already on drying patios and, in some cases, causing cherries to fall to the ground, which may reduce cup quality.
This could reduce the overall availability of higher-quality Arabica beans in the 2026/27 season, adding complexity at a time when other Arabica-producing origins are in their offseason. If rainfall persists through the winter and quality is materially affected, it could limit the expected decline in differentials for higher-quality Arabica, despite the bumper crop. For now, Brazilian differentials are declining with the harvest, but less than expected given current concerns (see our report).
On the positive side, a wetter winter can improve soil moisture and support the development of the next crop, although weather conditions in the second half of the year will be crucial for ensuring a strong season.
It is also important to note that these weather challenges are emerging at a time when destination stocks remain low, contributing to market volatility. ICE-certified stocks continue to trend downward, with Arabica inventories at their lowest levels since early 2024 (see report).
In this context, while Brazil’s bumper crop still points to a more bearish medium-term outlook, short-term weather conditions will be critical for Arabica availability and are likely to remain a major driver of market volatility.
Brazil: Cumulative Precipitation in Minas Gerais (mm)
Source: Bloomberg, Hedgepoint
Brazil: Cumulative Precipitation in São Paulo (mm)
Source: Bloomberg, Hedgepoint
In Summary
Weekly Report — Coffee
laleska.moda@hedgepointglobal.com
thais.italiani@hedgepointglobal.com
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