Coffee prices are showing renewed strength after falling to three-month lows, with December New York arabica coffee recovering alongside November London robusta. December arabica recently gained 3.60 cents (+1.32%), while November robusta increased 57 points (+1.75%) as technical buying and short covering provided support following the sharp sell-off of recent weeks.
The recovery is developing against a fundamentally bearish global supply outlook. The International Coffee Organization is forecasting record 2025/26 global production of 183.6 million bags, while consumption is projected at 180.6 million bags, leaving the market with an estimated 3 million-bag surplus.
The market is therefore facing an important conflict between abundant global production and improving crop conditions on one side, and tight arabica inventories and potential weather risks on the other.
The next major price drivers will be Brazil’s 2026/27 flowering conditions, Vietnam’s crop development, export flows, ICE inventories, El Niño risks and whether the recent oversold rebound can attract sustained buying.
Market Snapshot
| Factor | Current Situation |
|---|---|
| December 2026 Arabica Coffee | Higher by 3.60 cents (+1.32%) |
| November 2026 Robusta Coffee | Higher by 57 points (+1.75%) |
| 2025/26 Global Coffee Production | 183.6 million bags, +4.4% YoY |
| 2025/26 Global Consumption | 180.6 million bags, -0.9% YoY |
| Estimated Global Surplus | 3 million bags |
| USDA 2026/27 Global Production | 189.7 million bags, +6.0% YoY |
| USDA 2026/27 Global Ending Stocks | 26.3 million bags |
| USDA 2026/27 Brazil Production | 71.9 million bags, +14% YoY |
| Brazil August Coffee Exports | 4.155 million bags, +31% YoY |
| Vietnam 2026 Jan-Aug Exports | 1.33 MMT, +13.7% YoY |
| ICE Arabica Inventories | 258,415 bags |
| ICE Robusta Inventories | 5,258 lots |
Current Coffee Price Action
Coffee prices have rebounded sharply after reaching three-month lows, with technical buying becoming an important short-term driver.
The decline over the previous several weeks pushed both arabica and robusta into deeply oversold territory. This has encouraged funds to cover short positions and provided buying pressure across both markets.
The rebound, however, is occurring within a fundamentally well-supplied global market.
That distinction is important.
The latest price strength does not necessarily indicate that the underlying supply outlook has changed. Instead, the market is currently balancing technical recovery and short covering against expectations for record global production.
Whether the rebound develops further will depend on whether traders begin placing greater emphasis on weather and inventory risks or return their attention to the expanding global supply outlook.
Global Coffee Supply Moves Toward Record Levels
The global production outlook remains one of the largest bearish factors for coffee.
The International Coffee Organization expects 2025/26 global coffee production to increase 4.4% year-on-year to a record 183.6 million bags.
At the same time, global consumption is projected to decline approximately 0.9% to 180.6 million bags.
That combination produces an estimated 3 million-bag surplus, representing the first global coffee surplus in five years.
The projected surplus changes the fundamental backdrop considerably.
After several years in which supply shortages and low inventories provided substantial support, the market is now moving toward a period in which production could exceed consumption.
If the surplus materialises and inventories continue rebuilding, it could limit the ability of coffee prices to sustain major rallies.
USDA Raises 2026/27 Production Outlook
The USDA’s latest forecast reinforces the expectation of abundant supply.
Global coffee production during the 2026/27 season is projected at a record 189.7 million bags, an increase of approximately 6%, or 10.8 million bags, from the previous season.
Arabica production is expected to increase approximately 12% year-on-year, while robusta production is projected to decline by around 0.7%.
World ending stocks are forecast to increase by approximately 1.9 million bags to 26.3 million bags.
The projected increase in ending stocks is particularly important for the medium-term price outlook because it indicates that additional production could begin translating into greater physical availability.
Brazil Weather Supports the Next Crop
Brazil is becoming increasingly important as the market evaluates the potential size of the 2026/27 crop.
The country is moving through the critical flowering period for its next arabica crop, and recent rainfall has been favourable.
Somar Meteorologia reported approximately 33.4 mm of rainfall in Minas Gerais during the week ended September 20, equivalent to around 242% of the historical average.
Minas Gerais is Brazil’s most important arabica-producing region.
The current rainfall pattern is therefore potentially supportive of flowering and early crop development.
If favourable moisture conditions continue through the flowering period, expectations for the next Brazilian crop could increase further.
That would reinforce the bearish supply argument.
El Niño Creates a Counterweight
The weather outlook is not entirely bearish.
The potential development of a strong El Niño pattern remains an important risk for Brazil and other coffee-producing regions.
El Niño can produce significant shifts in rainfall and temperature patterns across agricultural regions, creating the possibility of both excessive rainfall and drought depending on location and timing.
Coffee traders are particularly focused on Brazil’s September and October rainfall because these months coincide with an important stage of flowering.
If El Niño delays or disrupts rainfall in Brazil, the current positive crop outlook could deteriorate.
The market therefore has to distinguish between current favourable weather conditions and the longer-term uncertainty surrounding the developing El Niño pattern.
Vietnam Crop Conditions Improve
Vietnam is providing another source of supply pressure, particularly for robusta.
The Central Highlands, Vietnam’s most important coffee-producing region, has recently benefited from abundant rainfall.
Improved soil moisture should support cherry development and potentially improve production prospects for the next crop.
Vietnam’s export performance is already reflecting stronger availability.
Coffee exports during January through August 2026 increased approximately 13.7% year-on-year to 1.33 million tonnes.
Vietnam’s 2025 coffee exports also increased 17.5% to approximately 1.58 million tonnes.
The combination of stronger exports and improving crop conditions is keeping pressure on robusta prices.
Brazil Exports Surge
Brazil’s harvest is reaching the export market and adding substantial volumes to global availability.
Brazil exported approximately 4.155 million bags of coffee during August, an increase of 31% year-on-year and a record for the month.
Arabica exports increased approximately 26% to 2.87 million bags, while robusta exports increased approximately 54% to 953,592 bags.
The acceleration in exports provides immediate evidence that Brazilian coffee is becoming increasingly available to international buyers.
This is particularly important because Brazil’s harvest is occurring alongside expectations for another large crop in the 2026/27 season.
Strong export flows could therefore remain a significant bearish influence on prices.
Arabica Inventories Remain a Bullish Counterweight
ICE arabica inventories provide an important counterargument to the abundant-production story.
Exchange stocks recently fell to a 27-year low of 217,646 bags before recovering to approximately 258,415 bags.
Although the recovery in inventories reduces some of the immediate supply pressure, stocks remain historically low.
This means the physical arabica market does not yet have the same level of inventory protection implied by the record global production forecasts.
If export flows fail to replenish exchange stocks quickly enough, low inventories could continue providing support to arabica prices.
Robusta Inventories Move Higher
The inventory picture is considerably different for robusta.
ICE robusta inventories have increased to approximately 5,258 lots, the highest level in around ten months.
Rising exchange stocks reinforce the broader supply pressure facing robusta.
This is occurring at the same time that Vietnam is reporting stronger exports and improved growing conditions.
The combination of higher inventories, stronger Vietnamese exports and improving crop prospects could keep robusta under greater pressure than arabica.
Bullish Sentiment
- Oversold technical conditions – The sharp decline of recent weeks has encouraged short covering and technical buying.
- Arabica inventories remain historically low – ICE arabica stocks recently reached a 27-year low.
- El Niño risk – A strong El Niño could disrupt rainfall and flowering conditions in Brazil and other producing regions.
- Brazil flowering remains weather-sensitive – Any deterioration in rainfall during the critical flowering period could reduce 2026/27 production potential.
- Arabica supply remains vulnerable to weather disruptions – Low inventories leave less physical-market protection against production problems.
- Global consumption remains substantial – Despite the projected surplus, global consumption remains above 180 million bags.
- Robusta production is expected to decline – USDA projections point to a 0.7% decline in global robusta production during 2026/27.
Bearish Sentiment
- Record global production expected – ICO forecasts 2025/26 production at 183.6 million bags.
- Global surplus has returned – The ICO estimates a 3 million-bag surplus for 2025/26.
- USDA expects another record crop – Global 2026/27 production is projected at 189.7 million bags.
- Brazil production outlook is strong – USDA forecasts a 71.9 million-bag Brazilian crop, up 14%.
- Brazilian exports are surging – August exports increased 31% year-on-year to a record 4.155 million bags.
- Vietnam exports are increasing – January-August exports rose 13.7% year-on-year.
- Vietnamese growing conditions have improved – Increased rainfall is improving soil moisture and supporting cherry development.
- Robusta inventories are rising – ICE robusta stocks have reached a ten-month high.
- Global ending stocks are expected to increase – USDA forecasts world ending stocks at 26.3 million bags.
Price Forecast: What Traders Are Watching
The key question for coffee is whether the current recovery represents the beginning of a broader price stabilisation or primarily a technical rebound following the sharp sell-off.
The market has become deeply oversold, creating room for further short covering.
However, the fundamental supply outlook remains challenging.
Record global production, rising Brazilian exports, improving Vietnamese crop conditions and expectations for higher global ending stocks could continue limiting upside if the weather outlook remains favourable.
The main potential shift would come from weather.
If El Niño begins producing adverse conditions in Brazil during the critical flowering period, production expectations could be revised lower. The market would also remain sensitive to any deterioration in Vietnam’s growing conditions.
Traders will therefore be watching Brazilian rainfall, flowering progress, Vietnam crop development, Brazilian exports, ICE inventories and revisions to global production estimates.
Supply Outlook
The supply outlook remains increasingly comfortable for the global coffee market.
Brazil is supplying substantial volumes into the export market as the current harvest progresses, while expectations for the 2026/27 Brazilian crop remain strong.
Vietnam is also contributing to greater robusta availability through higher exports and improved growing conditions.
The USDA’s 189.7 million-bag global production forecast represents a significant increase from the previous season and suggests that the market could have considerably more coffee available during 2026/27.
The major uncertainty is weather.
A strong El Niño could alter rainfall patterns across Brazil and Asia, potentially reducing production from current expectations.
For now, however, the balance of evidence points toward expanding supply.
Demand Outlook
Global coffee consumption remains substantial, but the latest ICO outlook points to a modest decline.
Consumption is projected at approximately 180.6 million bags during 2025/26, compared with production of 183.6 million bags.
The resulting surplus indicates that current demand is not sufficient to absorb the expected increase in production without some accumulation of stocks.
The coming months will therefore be important for determining whether lower prices stimulate additional consumption.
If demand improves as prices decline, some of the projected surplus could be absorbed.
If consumption remains subdued while production continues increasing, the inventory outlook could become progressively more bearish.
Market Outlook for the Coming Sessions
Coffee is entering a period where technical factors and fundamental supply expectations are pulling the market in different directions.
The recent rebound has been supported by oversold conditions and fund short covering, while the broader supply outlook remains pressured by record production expectations.
Brazilian exports are increasing rapidly, Vietnam is showing stronger export availability and growing conditions have improved across important producing regions.
At the same time, ICE arabica inventories remain historically low, while El Niño introduces a potentially significant weather risk for Brazil’s 2026/27 crop.
The coming sessions will therefore focus on Brazilian rainfall and flowering, Vietnam’s crop development, Brazilian export volumes, ICE inventories, El Niño forecasts and revisions to global production estimates.
If favourable weather continues, the record-production outlook could remain the dominant influence.
If weather conditions deteriorate significantly, particularly during Brazil’s flowering period, traders could begin reassessing the current supply projections.
Currency Hedger View
Coffee is predominantly traded in US dollars, creating an important currency component for international coffee producers, exporters, importers, roasters and other businesses involved in the global supply chain.
For companies purchasing Brazilian or Vietnamese coffee in US dollars while generating revenue in another currency, changes in the coffee price can be accompanied by changes in the underlying FX rate.
A weaker local currency against the US dollar can increase the effective cost of imported coffee even when the dollar-denominated commodity price is unchanged.
Businesses involved in international coffee transactions should therefore monitor both coffee prices and their underlying currency exposure.
Currency Hedger provides businesses with tools and solutions for managing foreign-exchange exposure around international commodity transactions and cross-border payments.
Visit www.currencyhedger.com for more information.
Analysis Louis Roche – Today Markets
Coffee is currently caught between a short-term technical recovery and a fundamentally expanding global supply outlook.
The recent rebound from three-month lows has been supported by deeply oversold conditions and fund short covering, but the underlying production outlook remains challenging for prices.
The ICO’s projected 3 million-bag global surplus, combined with the USDA’s forecast for 189.7 million bags of global production in 2026/27, points toward significantly greater availability.
Brazil is already adding substantial volumes to the international market, with August exports reaching a record 4.155 million bags, while Vietnam’s exports and growing conditions are also improving.
The major counterweight is weather.
Arabica inventories remain historically low and the potential impact of El Niño means Brazil’s 2026/27 flowering period remains particularly important. Any significant deterioration in rainfall could change production expectations and provide a fresh fundamental catalyst for prices.
For the coming sessions, the critical indicators will be Brazilian rainfall, flowering conditions, Vietnam’s crop development, Brazilian exports, ICE arabica and robusta inventories and revisions to global production forecasts.
The market therefore remains highly sensitive to whether record supply expectations are confirmed or whether weather risks begin to undermine the next crop.
Louis Roche – Today Markets
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