Coffee futures extended their weekly losses on Thursday as the market continued to price in the prospect of abundant global coffee supplies, with December arabica falling to a 2.5-month low. December ICE Arabica Coffee closed at -5.05 points, or -1.79%, while November ICE Robusta Coffee fell -39 points, or -1.14%.
The bearish pressure has intensified over the past three weeks following forecasts for a record global coffee crop and a return to surplus, while large Brazilian exports and improving growing conditions in Brazil and Vietnam are adding to expectations of stronger supplies during the 2026/27 season.
The International Coffee Organization (ICO) recently projected that 2025/26 global coffee production will rise 4.4% year over year to a record 183.6 million bags, while consumption is expected to decline 0.9% to 180.6 million bags. That would leave the global coffee market with an estimated 3 million-bag surplus, marking the first global surplus in five years.
However, the supply picture is not uniformly bearish. ICE arabica inventories have fallen to a 27-year low of just 217,646 bags, while the potential impact of El Niño on Brazil’s 2026/27 crop introduces significant weather risk. This leaves coffee traders balancing an increasingly abundant production outlook against exceptionally tight certified arabica inventories and the possibility of adverse weather later in the year.
Coffee Market Snapshot
| Market Factor | Latest Data | Market Impact |
|---|---|---|
| December Arabica Coffee | -5.05 (-1.79%) | Bearish |
| November Robusta Coffee | -39 (-1.14%) | Bearish |
| Arabica Price Trend | 2.5-month low | Bearish |
| 2025/26 Global Coffee Production | 183.6M bags, +4.4% y/y | Bearish |
| 2025/26 Global Consumption | 180.6M bags, -0.9% y/y | Bearish |
| Global Coffee Balance | 3M-bag surplus | Bearish |
| Brazil August Coffee Exports | 4.155M bags, +31% y/y | Bearish |
| Brazil August Arabica Exports | 2.87M bags, +26% y/y | Bearish |
| Brazil August Robusta Exports | 953,592 bags, +54% y/y | Bearish |
| Vietnam 2026 Jan-Aug Exports | 1.33M MT, +13.7% y/y | Bearish |
| Vietnam 2025/26 Production | 1.76M MT, +6% y/y | Bearish |
| ICE Arabica Stocks | 217,646 bags | Bullish |
| ICE Robusta Stocks | 5,043 lots | Bearish |
| USDA 2026/27 Global Production | 189.7M bags, +6% y/y | Bearish |
| USDA 2026/27 Global Ending Stocks | 26.3M bags, +1.9M | Bearish |
| USDA Brazil 2026/27 Crop | 71.9M bags, +14% y/y | Bearish |
| El Niño Risk | Potential major weather disruption | Bullish risk |
Why Are Coffee Futures Falling Today?
The dominant driver behind the latest decline is the changing global supply outlook.
Coffee prices have been under pressure for roughly three weeks as traders increasingly anticipate that global production will exceed consumption. The ICO’s latest projection is particularly important because it represents a shift from the tight supply conditions that supported coffee prices during previous seasons.
The ICO expects 183.6 million bags of global coffee production in 2025/26, up 4.4% from the previous year, against consumption of 180.6 million bags.
That produces an estimated 3 million-bag surplus.
It would also represent the first global coffee surplus in five years.
For futures markets, the significance is substantial. A market that moves from persistent deficit conditions toward surplus can experience considerable downward pressure as buyers become less concerned about immediate shortages and producers have more coffee available to bring to market.
The market is therefore increasingly looking beyond current tightness and toward the potential availability of coffee during the next production cycle.
Brazilian Coffee Exports Are Adding Heavy Supply Pressure
Brazil is currently one of the biggest bearish factors for coffee prices.
As the Brazilian harvest moves toward completion, coffee is increasingly reaching international export markets.
Cecafe reported that Brazilian coffee exports rose 31% year over year in August to 4.155 million bags, making it a record August for Brazilian coffee exports.
The increase was broad-based.
Brazilian arabica exports climbed 26% to 2.87 million bags, while robusta exports surged 54% to 953,592 bags.
Brazil’s Trade Ministry separately reported that August coffee exports increased 44.6% year over year to 206,618 MT, representing the country’s highest export volume in eight months.
The combination of a large Brazilian crop and exceptionally strong export flows means substantial quantities of coffee are moving into global supply chains.
This is particularly important for futures because the market is not simply dealing with expectations of future production. Physical Brazilian coffee is already entering international markets.
That can create additional selling pressure as exporters and producers hedge physical inventories and buyers have greater access to available supply.
Brazil Weather Is Becoming a Bearish Factor for 2026/27
Weather developments in Brazil are currently adding another bearish component to the market.
Above-normal rainfall has arrived during the critical flowering period for coffee trees, potentially improving prospects for the next crop.
Somar Meteorologia reported that 59.4 mm of rain fell in Minas Gerais during the week ending September 13, equivalent to 1,212% of the historical average.
Minas Gerais is Brazil’s principal arabica-producing region, making rainfall during flowering particularly important.
Under normal circumstances, better soil moisture and favourable rainfall during flowering can improve the prospects for fruit development and ultimately increase production.
That is precisely why the current rainfall pattern is weighing on prices.
Instead of creating immediate supply concerns, the latest Brazilian weather data is encouraging traders to consider the possibility of another strong crop in 2026/27.
Vietnam Coffee Supplies Are Also Increasing
Vietnam is providing another major source of supply pressure, particularly for robusta coffee.
Vietnam is the world’s largest robusta producer, and export data indicates that substantial volumes are reaching the international market.
Vietnam’s National Statistics Office reported that coffee exports during January-August 2026 increased 13.7% year over year to 1.33 million MT.
The country’s full-year 2025 coffee exports had already increased 17.5% to 1.58 million MT.
Production expectations are also improving.
Vietnam’s 2025/26 coffee production is projected at 1.76 million MT, or approximately 29.4 million bags, representing a 6% increase year over year and the highest production level in four years.
Forecaster Vaisala also reported that abundant rainfall has improved soil moisture across Vietnam’s Central Highlands.
The Central Highlands are Vietnam’s largest coffee-producing region, meaning better soil moisture conditions could support cherry development and improve the outlook for the upcoming crop.
This is particularly bearish for robusta futures because Vietnam is such a dominant producer in that segment.
ICE Arabica Inventories Provide a Major Bullish Counter-Signal
Despite the broad supply story, the physical availability of certified arabica coffee remains exceptionally tight.
ICE arabica coffee inventories fell to 217,646 bags, a 27-year low.
This is one of the most important bullish factors in the coffee market.
The global production outlook may be improving, but certified exchange stocks represent immediately deliverable supplies against futures contracts.
A prolonged decline in ICE arabica inventories can therefore provide support to futures even when broader production estimates are rising.
It also highlights an important distinction between global production and immediately available exchange-certified stocks.
Coffee can be plentiful globally while deliverable inventories remain relatively constrained.
That helps explain why the market continues to have a bullish fundamental argument underneath the current bearish price trend.
Robusta Inventories Tell a Different Story
The inventory picture is considerably less supportive for robusta.
ICE robusta inventories climbed to 5,043 lots, a 9.5-month high.
Rising certified inventories suggest that physical availability is improving and reduce concerns over immediate shortages.
The contrast between arabica and robusta inventories is therefore significant:
- Arabica inventories: 217,646 bags, a 27-year low — bullish.
- Robusta inventories: 5,043 lots, a 9.5-month high — bearish.
This divergence is one reason the two coffee contracts can respond differently to the same global supply developments.
USDA Forecasts Record Global Coffee Production
The USDA’s latest biannual forecast reinforces the bearish supply narrative.
On July 22, the USDA projected 2026/27 global coffee production at a record 189.7 million bags, an increase of 6.0%, or 10.8 million bags, from the previous season.
Improved growing conditions in Brazil are expected to be a major contributor to the increase.
The USDA expects global arabica production to rise approximately 12% year over year, while robusta production is forecast to decline by only 0.7%.
The global ending-stock forecast is also increasing.
World coffee ending stocks are projected to rise by approximately 1.9 million bags to 26.3 million bags.
Higher production combined with higher ending stocks creates a fundamentally bearish backdrop for futures prices.
Brazil’s 2026/27 Crop Could Reach a Record 71.9 Million Bags
Brazil represents the biggest component of the USDA’s bullish production assumptions.
The USDA’s Foreign Agricultural Service forecast on June 3 projected a record 2026/27 Brazilian coffee crop of 71.9 million bags, up 14% year over year.
If realised, that would represent a substantial increase in global availability.
Brazil’s importance to the international coffee market means even relatively small changes in its production outlook can have an outsized impact on futures prices.
The combination of:
- improving rainfall,
- strong flowering conditions,
- a large current harvest,
- record exports,
- and expectations for a record 2026/27 crop
is currently creating substantial downward pressure on coffee futures.
El Niño Creates a Major Bullish Weather Risk
The largest threat to the bearish production narrative is El Niño.
Coffee traders are closely monitoring the potential impact of the weather pattern on Brazil and other major growing regions.
Commercial, the coffee trader, has warned that El Niño could delay rainfall in Brazil during September and October, exactly when coffee-tree flowering normally occurs.
If rainfall becomes insufficient during this critical period, the next Brazilian crop could suffer despite the currently favourable moisture conditions.
The US Climate Prediction Center said on July 8 that the El Niño pattern emerging across the equatorial Pacific could become one of the strongest in more than 75 years.
That raises the possibility of significant weather volatility.
Potential floods, droughts and temperature fluctuations later this year could affect coffee-producing regions across Asia and South America.
Therefore, while current weather is broadly supportive of production, El Niño creates a significant tail risk for the 2026/27 supply outlook.
Bullish Sentiment
1. ICE Arabica Stocks Are at a 27-Year Low
ICE arabica inventories of just 217,646 bags indicate extremely tight certified supplies.
If stocks continue falling, the market could face renewed concerns about deliverable coffee availability.
2. El Niño Could Damage the 2026/27 Crop
A powerful El Niño could disrupt rainfall patterns across Brazil and other producing regions.
Any deterioration in flowering or cherry development could quickly reverse the current bearish production narrative.
3. Brazil’s Critical Flowering Period Is Approaching
The September-October period is particularly important for Brazil’s next crop.
If rainfall becomes delayed or inadequate, current production expectations could prove too optimistic.
4. Record Production Does Not Guarantee Immediate Availability
Global production forecasts can increase while exchange-certified inventories remain low.
That distinction leaves the arabica market vulnerable to renewed supply concerns if physical stocks continue tightening.
5. Coffee Weather Risk Remains Elevated
The combination of El Niño and the concentration of coffee production in weather-sensitive regions means the market remains vulnerable to sudden supply shocks.
Bearish Sentiment
1. Global Coffee Production Is Heading Toward a Record
The USDA expects 189.7 million bags of global coffee production in 2026/27, a record high.
The ICO also expects record production for 2025/26.
2. The Global Market Is Moving Into Surplus
The ICO estimates a 3 million-bag surplus for 2025/26.
That represents the first global surplus in five years and significantly weakens the scarcity narrative that previously supported prices.
3. Brazil Is Exporting Coffee at Record Levels
Brazil’s August exports reached a record 4.155 million bags, up 31% year over year.
The availability of Brazilian coffee is therefore increasing precisely when global production expectations are rising.
4. Vietnam Production and Exports Are Increasing
Vietnam’s exports and production are both rising.
That is particularly negative for robusta prices, with Vietnam supplying a major portion of the world’s robusta coffee.
5. Robusta Inventories Are Rising
ICE robusta stocks at a 9.5-month high of 5,043 lots indicate that supplies are becoming more readily available.
6. Brazilian Growing Conditions Are Currently Favourable
The extreme rainfall reported in Minas Gerais has improved soil moisture and could support flowering and crop development.
That is a bearish factor if favourable conditions persist.
The Coffee Market Is Facing a Fundamental Tug-of-War
Coffee futures are currently caught between two very different fundamental narratives.
The first is the record-supply narrative.
Production is expected to increase, Brazil is exporting aggressively, Vietnam’s supply outlook is improving and the ICO sees the global market moving into surplus.
The second is the tight-certified-stock and weather-risk narrative.
ICE arabica inventories are at a 27-year low, while El Niño could disrupt rainfall during a crucial stage of Brazil’s next crop.
This creates a market in which the longer-term supply outlook is bearish, but short-term weather developments can still produce sharp rallies.
Arabica and Robusta Are Sending Different Signals
The divergence between arabica and robusta inventories is particularly important.
Arabica futures are facing record production expectations and strong Brazilian exports, but certified stocks are extremely tight.
Robusta has the opposite combination: increasing Vietnamese production and exports alongside rising ICE inventories.
Consequently, the bearish supply narrative currently has a more direct impact on robusta, while arabica retains a significant underlying support factor through its exceptionally low exchange inventories.
What Traders Are Watching Next
Coffee traders will be focused on several developments:
- Brazilian September and October rainfall — particularly during the flowering period.
- El Niño developments — any evidence of delayed or disrupted rainfall could rapidly change market sentiment.
- Brazilian export volumes — continued record shipments would reinforce the bearish supply outlook.
- Vietnamese production and exports — particularly important for robusta.
- ICE arabica inventories — further declines could strengthen the bullish physical-supply argument.
- ICE robusta inventories — continued increases would add pressure to robusta futures.
- USDA crop estimates — revisions to the 2026/27 Brazilian and global production outlook will be closely watched.
- Global consumption — whether demand can absorb the expected increase in production will determine whether the projected surplus materialises.
Currency Hedger View
Coffee is a globally traded commodity, meaning producers, exporters, roasters and international buyers can face significant foreign-exchange exposure alongside commodity-price risk.
For Brazilian coffee exporters, movements in the Brazilian real against the US dollar can influence the local-currency value of dollar-denominated coffee revenues. For international buyers and traders, exchange-rate movements can similarly alter the effective cost of physical coffee.
This means the coffee market cannot always be assessed through futures prices alone.
Currency Hedger, part of Octalas Group, focuses on foreign-exchange exposure and currency-risk management, providing a relevant perspective for businesses whose coffee revenues, purchases or operating costs span multiple currencies.
For coffee-market participants, monitoring both coffee futures and USD/BRL currency movements can therefore provide a more complete picture of the effective commercial price environment.
Today Markets View
Coffee futures are under significant pressure as the market increasingly prices in larger global production, record Brazilian exports, stronger Vietnamese supplies and the possibility of a global surplus.
The ICO’s projected 3 million-bag surplus and the USDA’s forecast for 189.7 million bags of global production in 2026/27 provide the market with a substantial bearish supply narrative.
Brazil is particularly important. Record August exports, favourable rainfall in Minas Gerais and the USDA’s projected 71.9 million-bag Brazilian crop all point toward greater availability.
However, the bearish case is not without major risks.
ICE arabica inventories have fallen to a 27-year low of 217,646 bags, while the potential impact of a strong El Niño pattern on Brazil’s September-October flowering period could dramatically change the 2026/27 production outlook.
For now, coffee futures are responding primarily to the prospect of abundant supplies. But with certified arabica stocks exceptionally tight and weather risk increasing, the market remains highly sensitive to any deterioration in Brazil’s crop outlook.
Louis Roche, Analyst, Today Markets
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