Today Markets Analysis: Coffee prices came under renewed pressure on Tuesday, with December arabica coffee falling 2.36% to 283.25 cents per pound and November robusta declining 1.53% to $3,476 per tonne. The latest weakness reflects improving crop conditions in Brazil and Vietnam, record Brazilian exports and expectations for a larger global coffee surplus.

However, the market remains divided. Falling ICE arabica inventories, potential El Niño-related weather disruptions and longer-term crop risks provide support, while rising production forecasts and strong export flows remain significant bearish factors.

Arabica and Robusta Prices Extend Their Decline

December ICE arabica closed down 6.85 cents, while November robusta fell 54 points, extending the recent pressure across both major coffee contracts.

Brazil is currently at a critical stage of the 2026/27 arabica crop cycle, with flowering conditions becoming an important indicator for next year’s production. Above-normal rainfall in Minas Gerais is improving moisture availability, increasing expectations that the next Brazilian crop could benefit from favourable growing conditions.

Vietnam is also seeing improved conditions, with abundant rainfall raising soil moisture across the Central Highlands and potentially supporting cherry development.

Bullish Sentiment

Several factors continue to provide support for coffee prices:

• ICE arabica inventories: Stocks fell to a 27-year low of 217,646 bags, highlighting tight certified availability.
• El Niño risk: Potential disruptions to rainfall patterns in Brazil and other producing regions could damage the 2026/27 crop.
• Brazil flowering period: September and October remain particularly important for the development of next year’s crop.
• Global weather uncertainty: Flooding, drought and temperature fluctuations could create production problems across South America and Asia.
• Robusta production risk: Vietnam remains vulnerable to weather-related disruptions despite currently favourable rainfall.
• Supply tightness in certified stocks: The sharp decline in ICE arabica inventories contrasts with the improving production outlook.

Bearish Sentiment

The immediate fundamental picture remains heavily influenced by expanding supply:

• Brazilian exports surged: August total coffee exports increased 31% year-on-year to a record 4.155 million bags.
• Brazilian arabica exports: Shipments increased 26% to 2.87 million bags.
• Brazilian robusta exports: Shipments jumped 54% to 953,592 bags.
• Brazilian production outlook: The USDA expects a record 71.9 million bags from Brazil in 2026/27, up 14%.
• Global production: USDA forecasts 2026/27 global coffee output at a record 189.7 million bags, up 6%.
• Global surplus: The ICO expects a 3 million-bag surplus in 2025/26, the first surplus in five years.
• Vietnam exports: January-August 2026 exports rose 13.7% year-on-year.
• Robusta inventories: ICE robusta stocks climbed to a 9.5-month high of 5,043 lots.

Brazil Rainfall Improves the 2026/27 Coffee Crop Outlook

Weather in Brazil has become one of the most important short-term drivers.

Somar Meteorologia reported 59.4 mm of rainfall in Minas Gerais during the week ending September 13, equivalent to 1,212% of the historical average for that period.

Minas Gerais is Brazil’s main arabica-producing region, making the rainfall particularly significant as trees enter the flowering phase.

For coffee prices, the market is therefore balancing two opposing signals: the rainfall is bearish because it improves the prospects for next year’s crop, but weather forecasts remain vulnerable to sudden changes during the critical flowering period.

Brazil’s Record Exports Keep Pressure on Coffee

Brazil’s current crop is reaching international markets at a rapid pace.

Total August coffee exports reached a record 4.155 million bags, with both arabica and robusta shipments recording substantial annual increases.

Brazil’s Trade Ministry separately reported that August coffee exports rose 44.6% year-on-year to 206,618 tonnes, the highest level in eight months.

The strong export performance is providing physical-market supply at a time when futures traders are already anticipating increased global production.

Global Coffee Supply Is Moving Into Surplus

The International Coffee Organization’s latest outlook represents a significant change in the global supply balance.

The ICO expects 2025/26 production to rise 4.4% to a record 183.6 million bags, while consumption is forecast to decline 0.9% to 180.6 million bags.

That leaves an estimated 3 million-bag surplus, marking the first global surplus in five years.

The USDA’s outlook is even more expansive for 2026/27, forecasting global production at 189.7 million bags, an increase of 10.8 million bags.

Vietnam Adds to the Global Supply Outlook

Vietnam’s production and export figures are particularly important for the robusta market.

The country’s January-August 2026 coffee exports increased 13.7% year-on-year to 1.33 million tonnes, while 2025 exports rose 17.5% to 1.58 million tonnes.

The 2025/26 Vietnamese crop is also estimated at 1.76 million tonnes, equivalent to approximately 29.4 million bags, representing a four-year high.

Improved rainfall across Vietnam’s Central Highlands is now adding to expectations for healthy cherry development.

That combination is weighing more heavily on robusta than arabica, particularly with ICE robusta inventories simultaneously rising.

El Niño Remains the Major Weather Wildcard

The bearish production outlook is not without risk.

Coffee traders continue to monitor the developing El Niño weather pattern, which could disrupt rainfall across major producing regions.

Commercial Coffee has warned that El Niño could delay rainfall in Brazil during September and October, potentially damaging flowering and reducing the 2026/27 crop.

The US Climate Prediction Center has also indicated that the developing El Niño could become one of the strongest in more than 75 years.

This creates an important distinction between the current supply outlook and the longer-term crop risk. Current rainfall is improving Brazil’s crop prospects, but a sustained change in weather conditions could quickly alter expectations.

Coffee Inventory Signals Are Sending Mixed Messages

The inventory picture is unusually divided between arabica and robusta.

ICE arabica inventories at 217,646 bags are at a 27-year low, providing a strong underlying supply argument for arabica futures.

Robusta presents the opposite picture. ICE robusta inventories have climbed to 5,043 lots, their highest level in approximately 9.5 months.

This divergence helps explain why the two contracts can respond differently to changes in supply expectations.

What Traders Are Watching Next

Coffee traders will be watching several factors closely:

1. Brazilian flowering conditions as the 2026/27 crop develops.
2. Brazilian export volumes following the record August shipments.
3. Vietnamese rainfall and crop development in the Central Highlands.
4. ICE arabica inventories, which remain historically low.
5. ICE robusta inventories, which are moving in the opposite direction.
6. El Niño forecasts and their potential impact on Brazil, Vietnam and other producing regions.
7. USDA and ICO revisions to global production and consumption estimates.

The key question is whether improving production expectations can continue to outweigh historically tight arabica inventories and emerging weather risks.

Currency Hedger View

Coffee is particularly sensitive to currency movements because Brazil and Vietnam are major exporters and changes in the US dollar against producer currencies can influence farmer selling and export economics.

For coffee importers and roasters, the combination of volatile futures prices and currency movements can create significant changes in landed costs. Forward contracts and structured hedging can help businesses manage that combined commodity and FX exposure.

Currency Hedger — www.currencyhedger.com

Market analysis contributed by Currency Hedger, an Octalas Group division specialising in foreign exchange, currency risk and hedging.

Today Markets View

Coffee is currently caught between strong near-term supply signals and significant longer-term production risks.

The bearish case is being reinforced by Brazil’s record exports, favourable rainfall, rising Vietnamese supply and forecasts for record global production. At the same time, historically low ICE arabica inventories and the possibility of El Niño-related crop disruption prevent the supply outlook from being one-directional.

The divergence between falling arabica stocks and rising robusta inventories is particularly important. It suggests that the market should not treat all coffee supply signals as identical.

“Coffee prices are being pressured by an increasingly comfortable global supply outlook, but the exceptionally low level of certified arabica inventories and the risk of El Niño disrupting next year’s flowering cycle leave an important layer of uncertainty beneath the bearish trend.” — Louis Roche, Analyst, Today Markets

Bottom Line

Coffee prices are under pressure as favourable weather in Brazil and Vietnam, record Brazilian exports and expectations for record global production strengthen the supply outlook.

The bearish case is led by rising production, strong exports and the expected global surplus. The bullish case is centred on historically low arabica inventories, El Niño risks and the possibility that weather conditions deteriorate during the critical flowering period.

For now, the market remains focused on whether improving 2026/27 crop prospects can overcome tight certified arabica stocks and rising weather uncertainty.

Analysis by Louis Roche, Analyst, Today Markets

Market analysis contributed by Currency Hedger, an Octalas Group division specialising in foreign exchange, currency risk and hedging.