Coffee prices are under renewed pressure as expanding supplies from Brazil and Vietnam outweigh weather-related concerns and extremely low arabica inventories. The market is also dealing with a significant divergence between the two major coffee varieties, with strong Brazilian exports weighing on arabica while elevated Vietnamese supply and rising robusta inventories pressure robusta futures.
December ICE arabica coffee is down 11.75 points, or 3.86%, while November ICE robusta coffee is down 105 points, or 2.92%.
The market initially moved higher, with arabica reaching a 3.5-week high and robusta a 6-week high, but selling accelerated as traders focused on Brazil’s latest export data and expectations for abundant global supplies.
Market Snapshot
| Market Factor | Current Outlook |
|---|---|
| December Arabica Coffee | -11.75 points, -3.86% |
| November Robusta Coffee | -105 points, -2.92% |
| Brazil September Coffee Exports | 236,000 MT, +20%+ y/y |
| Brazil August Coffee Exports | 4.155 million bags, +31% y/y |
| Brazil 2026 Coffee Crop | 67.6 million bags |
| Brazil 2026 Arabica Crop | 48.21 million bags, +34.8% y/y |
| Brazil 2026 Robusta Crop | 19.39 million bags, -6.6% y/y |
| Vietnam September Exports | 124,000 MT, +53% y/y |
| Vietnam Jan-Sep Exports | 1.45 MMT, +16.2% y/y |
| Vietnam 2025/26 Production | 1.76 MMT, +6% y/y |
| ICE Arabica Stocks | 260,654 bags |
| ICE Robusta Stocks | 5,398 lots |
| ICO 2025/26 Global Production | 183.6 million bags |
| ICO 2025/26 Global Balance | 3 million bag surplus |
| USDA 2026/27 Global Production | 189.7 million bags |
| USDA 2026/27 Ending Stocks | 26.3 million bags |
Price Action and Market Structure
Coffee prices have reversed sharply after initially benefiting from currency and weather-related support.
The Brazilian real recently reached a 4.75-month high against the US dollar. A stronger real can discourage Brazilian producers from selling coffee for export because local-currency returns become less attractive when converted from dollar-denominated sales.
That currency support helped push arabica to a 3.5-week high and robusta to a 6-week high.
However, the latest Brazilian export data changed the market’s focus.
Brazil’s September coffee exports increased by more than 20% year over year to approximately 236,000 MT, reinforcing expectations that large supplies are now reaching international markets.
This has encouraged long liquidation and shifted the immediate market focus back toward physical availability.
Brazil Supply Remains the Major Bearish Factor
Brazil’s coffee harvest is now providing substantial supply to the global market.
Cecafé reported that August coffee exports increased 31% year over year to 4.155 million bags, a record for the month.
Arabica exports increased 26% to 2.87 million bags, while robusta exports surged 54% to 953,592 bags.
Brazil’s Trade Ministry also reported that August coffee exports rose 44.6% year over year to 206,618 MT, the strongest level in eight months.
The latest September export increase reinforces the message that Brazil is entering the global market with substantial volumes.
This additional supply is particularly important because it arrives while the market is already expecting a large Brazilian crop.
Brazil Crop Outlook
Brazil’s Conab has raised its 2026 coffee production estimate to 67.6 million bags, from its previous forecast of 66.7 million bags.
Arabica production is expected to rise a substantial 34.8% year over year to 48.21 million bags.
Robusta production is expected to decline 6.6% to 19.39 million bags, meaning the overall increase is being driven primarily by arabica.
The USDA is even more optimistic about the longer-term Brazilian crop.
Its Foreign Agricultural Service projects a record 71.9 million bags for Brazil’s 2026/27 crop, representing a 14% annual increase.
The divergence between current exports and forward crop expectations therefore remains a major bearish factor for coffee prices.
Vietnam Supply Adds Pressure to Robusta
Vietnam is providing another source of supply pressure, particularly for robusta.
Vietnamese September coffee exports increased 53% year over year to 124,000 MT.
Exports for January through September have reached approximately 1.45 MMT, up 16.2% year over year.
Vietnam’s total coffee exports in 2025 also increased 17.5% to 1.58 MMT.
Production is expected to remain strong, with the 2025/26 Vietnamese crop projected at approximately 1.76 MMT, up 6% year over year and representing a four-year high.
Vietnam is the world’s largest robusta producer, making these export and production figures particularly important for robusta futures.
Weather Provides a Counterweight
Despite the strong supply outlook, weather remains an important upside risk.
El Niño could delay rainfall in Brazil during September and October, a period that is important for coffee-tree flowering.
The US Climate Prediction Center has indicated that the emerging El Niño pattern could become one of the strongest in more than 75 years.
A strong El Niño could create a more volatile weather environment across South America and Asia, including periods of excessive rainfall, drought and abnormal temperatures.
If Brazilian flowering is negatively affected, the current expectations for a large 2026/27 crop could eventually be revised lower.
Brazilian Rainfall Currently Supports Production
The immediate weather picture is more favorable for coffee production.
Somar Meteorologia reported approximately 33.3 mm of rainfall in Minas Gerais during the week ending October 4, equivalent to 104% of the historical average.
Minas Gerais is Brazil’s primary arabica-producing region.
Adequate rainfall during the flowering period can support tree development and improve the prospects for next year’s crop.
This is currently a bearish factor because it offsets some of the concerns about El Niño.
Vietnam Growing Conditions Also Improve
Vietnam is receiving favorable weather conditions as well.
Recent abundant rainfall has improved soil moisture in the Central Highlands, the country’s most important coffee-growing region.
Improved soil moisture should support cherry development and provide a stronger foundation for the next crop.
This adds to the bearish supply outlook for robusta.
However, weather remains a two-sided factor. Conditions are favorable today, but the potential for a stronger El Niño means the outlook could change quickly.
Global Coffee Balance
The International Coffee Organization has projected a record global crop for 2025/26.
Global production is estimated at 183.6 million bags, up 4.4% year over year.
At the same time, consumption is expected to fall 0.9% to approximately 180.6 million bags.
That creates a global surplus of approximately 3 million bags, the first surplus in five years.
The shift from deficit toward surplus is one of the primary reasons coffee prices have struggled to maintain earlier highs.
USDA 2026/27 Outlook
The USDA’s longer-term forecast remains bearish.
Global coffee production for 2026/27 is projected to rise 6% to a record 189.7 million bags.
The increase is expected to come primarily from improved growing conditions in Brazil.
Global arabica production is projected to rise approximately 12% year over year, while robusta production is expected to decline 0.7%.
World ending stocks are forecast to increase by approximately 1.9 million bags to 26.3 million bags.
This combination of rising production and higher ending stocks provides a significant supply cushion.
Arabica and Robusta Inventories Diverge
Coffee inventories are sending different signals across the two markets.
ICE arabica stocks fell to only 217,646 bags on September 15, a 27-year low.
Stocks have since recovered to approximately 260,654 bags, their highest level in two months, but inventories remain historically tight.
This provides an important underlying support factor for arabica prices.
Robusta inventories tell a different story.
ICE robusta stocks have climbed to approximately 5,398 lots, the highest level in 10 months.
The divergence suggests that robusta currently faces considerably more comfortable physical supply conditions than arabica.
Robusta Positioning Could Trigger Short Covering
Although the fundamental picture for robusta is bearish, positioning creates a potential source of upside volatility.
Commodity funds have built a substantial net-short position.
The latest weekly Commitment of Traders report showed funds increasing their robusta short position by 2,658 contracts to 3,959 net-short positions, the highest level in 13 months.
If prices begin to rise because of weather concerns or a weaker dollar, these large short positions could become vulnerable to covering.
That could produce a sharp rally even if the underlying supply picture remains comfortable.
Bullish Scenario
Coffee prices could regain upside momentum if:
- El Niño delays or disrupts Brazilian rainfall.
- Brazilian flowering conditions deteriorate.
- Brazil’s 2026/27 crop estimates are revised lower.
- ICE arabica inventories begin falling again.
- The Brazilian real continues strengthening.
- Robusta short positions trigger significant short covering.
- Vietnam’s production or exports disappoint.
- Global demand improves more strongly than expected.
- Weather disruptions emerge across major Asian or South American growing regions.
The extremely low arabica inventory base means even a modest production disruption could generate significant price volatility.
Bearish Scenario
Coffee prices could remain under pressure if:
- Brazil’s export pace remains elevated.
- Brazil’s large 2026 crop reaches international markets.
- Vietnam maintains strong robusta exports.
- Brazilian flowering conditions remain favorable.
- Vietnam’s Central Highlands continue receiving adequate rainfall.
- Global production reaches USDA expectations.
- Ending stocks continue increasing.
- The US dollar strengthens.
- Global consumption remains below production.
The combination of record or near-record production and increasing stocks would reinforce the case for lower prices.
Coffee Price Outlook
The short-term bias remains bearish, particularly as Brazilian and Vietnamese supplies increase.
However, arabica has a stronger fundamental support base than robusta because ICE arabica inventories remain historically low.
Robusta faces more immediate supply pressure because Vietnam’s exports are increasing and ICE robusta stocks have reached a 10-month high.
The market is therefore likely to remain highly sensitive to weather developments.
A sustained break lower would strengthen the bearish trend, while any significant El Niño-related production threat could quickly reverse sentiment.
Supply Outlook
The supply outlook is currently expanding.
Brazil’s larger crop and strong export pace are adding significant volumes to the international market, while Vietnam’s improving production and sharply higher exports are increasing robusta availability.
The USDA’s record global production forecast for 2026/27 reinforces the expectation of comfortable supply.
The major risk is that El Niño disrupts the next Brazilian crop before those production expectations can be fully realized.
Demand Outlook
Demand is currently sufficient to absorb global production, but the market is not showing the type of demand growth that would justify a sustained supply premium.
The ICO’s 2025/26 figures point to consumption of approximately 180.6 million bags against production of 183.6 million.
The resulting surplus indicates that production is currently running ahead of demand.
For prices to regain a sustained bullish trend, demand would likely need to improve or supply expectations would need to deteriorate.
Louis Roche Analysis
Coffee is currently facing a classic conflict between large incoming supplies and significant weather risk.
The immediate fundamentals are bearish. Brazil is exporting aggressively, Vietnam is increasing exports, global production is expected to reach record levels and inventories are rising in robusta.
However, I would not ignore the opposite side of the equation.
Arabica inventories remain historically low, and the possibility of a strong El Niño creates a meaningful threat to the next Brazilian crop. The Brazilian real also remains an important market variable because sustained currency strength can discourage producer selling.
The robusta market is particularly interesting from a positioning perspective. Funds are holding their largest net-short position in 13 months. If weather concerns return or Brazilian supply expectations deteriorate, short covering could amplify an otherwise moderate fundamental rally.
My current view is bearish in the near term, but with increasing upside weather risk into the next crop cycle.
For arabica, the extremely low inventory base means that prices could react aggressively to any evidence of production damage. For robusta, the supply picture is more comfortable, but the crowded short position creates greater potential for sudden upside volatility.
The key question for the market is whether the current supply expansion remains intact through the next flowering and crop-development period.
Coming Sessions
The coffee market will remain focused on:
- Brazilian export volumes — continued strong shipments would keep pressure on prices.
- Brazilian rainfall — current conditions are favorable, but El Niño remains a threat.
- Brazilian flowering — the key early indicator for the next arabica crop.
- Vietnamese exports — continued growth would pressure robusta.
- ICE arabica inventories — historically low stocks remain a major support factor.
- ICE robusta inventories — further increases would reinforce the bearish supply picture.
- Fund positioning — particularly the large robusta net-short position.
- Brazilian real direction — currency strength can discourage Brazilian export selling.
- El Niño developments — increasingly important for the 2026/27 production outlook.
- Global production estimates — revisions from the USDA and other crop agencies will remain market-moving.
Today Markets View
Coffee remains under near-term bearish pressure as Brazil and Vietnam deliver increasing volumes into the international market.
However, the market is not without significant upside risks. Historically low arabica inventories, a potentially powerful El Niño and heavy speculative short positioning in robusta could all contribute to a sharp reversal if production concerns return.
Today Markets maintains a cautious bearish near-term view, while expecting elevated volatility as the market transitions from the current supply surplus toward the 2026/27 crop cycle.
Currency Hedger View
Currency movements remain particularly important for coffee because Brazil is the world’s dominant arabica producer and exporter.
A stronger Brazilian real can discourage producer selling by reducing the attractiveness of dollar-denominated export revenue when converted into local currency. Conversely, a weaker real can encourage producers to increase export sales.
The US dollar also remains an important macroeconomic driver for dollar-denominated coffee futures.
Currency Hedger monitors foreign exchange markets alongside broader commodity and macroeconomic conditions, helping businesses assess and manage their international currency exposure.
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Contributor
Louis Roche – Today Markets
Market analysis prepared for Today Markets. For informational purposes only and not intended as investment, trading, financial or commodity advice.
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