December Arabica coffee futures (KCZ26) closed lower on Friday, falling 2.45 points, or 0.85%, while November ICE Robusta coffee (RMX26) declined 29 points, or 0.82%.

Arabica prices consolidated just above Thursday’s seven-week low as the market continued to digest evidence of increasing global coffee availability. Brazil remains a key source of bearish pressure, with export volumes accelerating as the country’s harvest approaches completion.

Brazilian exporter group Cecafe reported late Thursday that total Brazilian coffee exports in August increased 31% year-on-year to 4.155 million bags, a record for the month. Arabica exports rose 26% to 2.87 million bags, while robusta exports jumped 54% to 953,592 bags.

Brazil’s Trade Ministry also reported that August coffee exports increased 44.6% year-on-year to 206,618 metric tonnes, marking the highest monthly volume in eight months.

Global Supply Outlook

Coffee prices have also been pressured by the International Coffee Organization’s latest assessment of global supply and demand.

The ICO projects 2025/26 global coffee production at a record 183.6 million bags, up 4.4% year-on-year, while consumption is expected to decline 0.9% to 180.6 million bags. That would leave the global market with an estimated 3 million-bag surplus, representing the first surplus in five years.

Weather developments in Brazil are also adding to the bearish outlook. Somar Meteorologia reported 8.9 mm of rainfall in Minas Gerais during the week ending August 30, equivalent to 127% of the historical average. Above-normal rainfall could support flowering ahead of next year’s crop.

Vietnam Robusta Supply in Focus

Robusta prices remain vulnerable to increasing Vietnamese exports and production expectations.

Vietnam’s National Statistics Office reported that coffee exports during January-August 2026 increased 13.7% year-on-year to 1.33 million tonnes. Full-year 2025 exports rose 17.5% to 1.58 million tonnes.

Vietnam’s 2025/26 coffee production is projected to increase 6% year-on-year to 1.76 million tonnes, equivalent to approximately 29.4 million bags.

However, heavy rainfall across Vietnam’s Central Highlands is providing some support to robusta prices, with concerns that flooding could damage farms and disrupt production in the country’s major coffee-growing region.

Inventories Provide a Diverging Signal

ICE inventories are sending different signals across the two markets.

ICE Arabica stocks fell to 217,932 bags on Friday, the lowest level in 27 years. Falling exchange inventories remain a supportive factor for arabica prices.

Robusta inventories are moving in the opposite direction. ICE robusta stocks reached a 9.5-month high of 5,004 lots on September 2, before easing slightly to 4,972 lots on Friday.

El Niño Risk Remains a Key Bullish Factor

Despite the improving supply outlook, weather remains an important upside risk.

Coffee trader Commercial has warned that an El Niño weather pattern could delay rainfall across Brazil during September and October, potentially affecting the flowering period and reducing the potential of the 2026/27 crop.

The US Climate Prediction Center previously warned that the emerging El Niño could become one of the strongest such events in more than 75 years. If confirmed, the resulting shifts in rainfall, temperatures and extreme-weather risks could affect coffee production across both South America and Asia.

USDA Forecast Points to Record Production

The latest USDA biannual forecast remains bearish for the medium-term coffee outlook.

The USDA expects 2026/27 global coffee production to rise 6.0%, or 10.8 million bags, to a record 189.7 million bags, largely reflecting improved growing conditions in Brazil.

Global arabica production is forecast to increase 12% year-on-year, while robusta production is expected to decline 0.7%.

World ending stocks are projected to increase by 1.9 million bags to 26.3 million bags.

For Brazil specifically, the USDA Foreign Agricultural Service forecasts a record 71.9 million-bag 2026/27 crop, representing a 14% year-on-year increase.

Today Markets View

The coffee market is currently caught between strong near-term supply and longer-term weather risk.

Record Brazilian exports, rising global production estimates and improving supply expectations are creating a bearish fundamental backdrop, particularly for arabica. At the same time, historically low ICE arabica inventories and the potential impact of El Niño prevent the market from becoming decisively bearish.

For robusta, Vietnamese export growth and rising ICE inventories remain significant headwinds, although excessive rainfall in the Central Highlands could provide temporary support.

Louis Roche, Analyst at Today Markets, commented:

“Coffee remains a market of competing fundamentals. The immediate supply picture is clearly improving, with Brazil and Vietnam delivering stronger export volumes, but the market is already looking beyond the current harvest. Extremely low arabica inventories and the potential impact of El Niño on the next Brazilian crop could create renewed upside volatility if weather conditions deteriorate.”

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Analysis by Louis Roche, Analyst, Today Markets