Global Coffee Prices Surge in July Driven by Brazil Weather and El Nino Outlook, ICO Reports

Global coffee prices experienced a sharp upward movement in July, according to the latest market report from the International Coffee Organisation (ICO). The ICO Composite Indicator Price (I-CIP) averaged 287.26 US cents a pound during the month, marking a 15.4 per cent increase compared to June.

The report noted that Arabica prices rose at a faster pace than Robusta. Colombian Milds and Brazilian Naturals saw increases of 18.1 per cent and 17.9 per cent respectively, while Other Milds gained 16.5 per cent and Robustas rose by 9.1 per cent.

According to the ICO, the price surge was primarily driven by weather-related issues in Brazil, a strengthening El Nino outlook, and tightening immediately deliverable Arabica supplies. US-certified stocks dropped by 30 per cent to reach their lowest level since January 2024. Additionally, substantial increases in ICE margin requirements affected financing needs, market participation, and liquidity, which may have contributed to short-term price volatility.

The US Climate Prediction Center reported a 97 per cent probability that El Nino would persist through early spring 2027 and an 81 per cent probability of a very strong event between October and December 2026. This outlook indicates potential regional rainfall and temperature anomalies affecting coffee production in Asia and South America.

In India, domestic prices have moved broadly in tandem with global trends and continue to rule firm ahead of the new crop year starting in October. M Salman Baseer, Chairman of the Karnataka Planters Association (KPA), stated that Arabica prices increased by about 10-12 per cent, while Robustas saw a slower pace of growth. He noted that relatively low rainfall has aided the 2026-27 crop by reducing pest attacks and berry droppings, though deficit rains could pose challenges next year.

Data from the Coffee Board shows that farm gate raw coffee prices for Arabica Parchment ranged between ₹24,600 and ₹25,100 per 50 kg bag as of August 28, compared to ₹22,300 and ₹22,800 on June 1. Arabica Cherry prices ranged from ₹13,600 to ₹15,250, while Robusta Parchment stood at ₹18,000 to ₹18,500. Robusta Cherry prices were recorded around ₹10,000 to ₹10,850.

Praveen Kolimarla of Agrani Coffee and Commodities observed that Indian prices adjusted upwards ahead of ICO calculations. Differentials for Indian Robusta Parchment AB are ruling higher at $1,300 to $1,500 per tonne over London terminal prices, while Indian Arabica Plantation A trades at a premium differential of 15 to 18 cents per pound over ICE New York Terminal prices.

"The recent surge in global coffee prices highlights the vulnerability of agricultural supply chains to climate anomalies and regulatory shifts like margin requirements. For businesses and agribusiness startups operating in this space, managing commodity price volatility and anticipating weather-driven supply constraints are critical for maintaining operational margins. As domestic prices adjust to global trends, stakeholders must adopt robust risk management and forecasting strategies to navigate these market fluctuations effectively." — Dr. Shishir Gupta, Founder & CEO, StartupLanes