Summary
Key Takeaways:
NY Arabica rebounded in June, with September NY finishing near 296 cts (+15% on the month) as fund short-covering overwhelmed heavy early selling.
Certified stocks fell a further 58k bags to ~377k, and the trade sees sub-300k by August; the NY Sep/Dec spread firmed to over 14 cts.
Brazilian harvest pressure built into month-end, drawing out discounted 26/27 and 27/28 offers and weighing on differentials.
LDN managed-money net length rose sharply over the month, while gross-long PMPU positioning sits at multi-year lows.
Updated estimates lifted supply expectations — USDA Brazil 71.9m bags and Rabobank world output 182.3m (+5.6%).
June 2026 Market Commentary
Futures & Positioning
June opened with September NY declining a further 20 cts to $2.39, as non-commercial and index gross shorts added nearly 10,000 lots. A lack of farmer selling, together with rains forecast for mid-month in south Minas, prompted an oversold correction — and those rains added to harvest delays while raising quality concerns.
Fund short-covering then rallied NY back into the 270/285 area, where the market met significant selling out of Brazil’s Zona da Mata (traded roughly -20/-25 cts under Sept NY). The Sul de Minas community stayed largely absent on 26/27 fine cup, but the June 30th spike drew out sizeable SdM offers at -15 cts and wider against September.
There was also a pickup in discounted 27/28 Brazilian offers, with the farmer acutely aware of the forward NY curve, the R$ contango, the present value of money and the biennial cycle.
In short, June was a 60-plus ct rollercoaster: funds sold heavily into roaster buying, then short-covered into Brazil selling, with the speculative buying on the final day of the month likely reflecting some portfolio rebalancing.
On positioning, LDN’s COT stands out — managed-money net length rose materially over the month, while gross-long PMPU “trade” levels are now at multi-year lows.
Recent Updated Estimates
USDA Brazil: 71.9 million bags (47.5 million arabica; 24.4 million robusta)
Rabobank global coffee production: 182.3 million bags for 2026/27, up 5.6% from 172.6 million in 2025/26
Marex Brazil: 76.3 million bags for 2026/27 (50.5 million arabica; 25.8 million robusta)
Certified Stocks
ICE NY certified stocks declined by 58,000 bags, closing the month at 377,000 bags. Trade estimates suggest stocks could fall below 300,000 bags during August. The September/December NY spread firmed from 7.5 cents to more than 14 cents during June.
Certified stocks have traditionally served as the trade’s final backstop against supply delays. With destination stocks at historically low levels and freight disruptions related to the Middle East, current certified-stock levels do not represent a viable buffer.
Climate Concerns
NOAA’s Climate Prediction Center projects that El Niño will emerge during the summer of 2026, with a 63% chance of a very strong event from November through January. The CPC also assigns a roughly one-in-three chance that El Niño will remain below “very strong” intensity, although the precise definition of “weaker” remains to be determined.
Moreton Capital Partners recently announced plans to raise $500 million for a fund that will trade El Niño-related agricultural opportunities through futures, options and swaps.
Near-Term Outlook
Brazil’s arabica harvest has been somewhat delayed, and there may be rain-related quality issues. Nevertheless, most reputable analysts continue to expect a 2026/27 arabica crop of approximately 50 million bags.
The speculative rally back above $3 has prompted Sul de Minas farmers to sell fine-cup coffees for nearby shipment against premium September NY futures. The September/December spread settled at 14.35 cents at the end of June. Buyers still need to cover their remaining July and August shorts, but once that demand has been addressed, who will remain to bid for coffee against September?
If a buying vacuum emerges, one might imagine that a trade house is already assessing the discounted differential, freight economics and timing required to determine whether any board-related opportunities exist.
The July/September spreads in both NY and LDN are significantly inverted. LDN July open interest is minimal, but more than 800 lots of July NY remain to play out. Twenty-six notices had been issued by month-end.
Stepping back from the inversion discussion, the NY futures curve has shifted into a slight contango from March 2027 onward—a potential harbinger of the impending surplus.
The rally has widened the NY–LDN arbitrage further, doing nothing to reduce conilon use in Brazil’s domestic market. Even at lower NY prices, conilons in the internal market traded at healthy discounts to low-grade arabicas. Trade estimates suggest that conilon still accounts for 75–85% of domestic usage.
Brazil’s 2026/27 surplus is predominantly arabica. At some point, that internal arbitrage relationship should adjust.
Well-capitalized Brazilian producers have managed their marketing relatively well so far. The key question is how that approach will evolve as the harvest progresses, stocks accumulate and nearby demand against September is filled.
Appendix:
Arabica Forward Curve:
Robusta Forward Curve:
Flat price:
ICE Arabica and Robusta front month:
Physical prices Brazil
CoT
Certified stocks:
