Coffee futures remain under pressure as expanding supplies from Brazil and Vietnam challenge weather-related production risks and tightening arabica inventories. Both arabica and robusta contracts have retreated after recent rallies, with export growth and forecasts for record global production reinforcing expectations of a better-supplied market. However, potential El Niño disruption to flowering and crop development in South America and Asia remains a significant upside risk heading into the next production cycle.

The market is increasingly caught between a near-term supply recovery and uncertainty over the 2026/27 crop. Export flows, rainfall during Brazil’s flowering period, Vietnamese crop development and changes in exchange inventories are likely to determine whether coffee prices extend their declines or establish a stronger recovery.

Market Snapshot

Market indicator	Latest reported data	Market implication
December arabica futures (KCZ26)	-3.65 points, or -1.25%	Bearish near-term momentum
November robusta futures (RMX26)	-62 points, or -1.78%	Greater pressure from expanding supply
Brazil September coffee exports	236,000 MT, up more than 20% year-on-year	Bearish
Brazil 2026 coffee production estimate	67.6 million bags	Larger domestic supply outlook
Global 2025/26 coffee production	Record 183.6 million bags	Bearish
Global 2025/26 market balance	3 million-bag surplus	Bearish
ICE arabica inventories	260,654 bags, a two-month high in the latest cited report	Potentially bearish, despite historically low levels
ICE robusta inventories	5,398 lots, a ten-month high	Bearish
Global 2026/27 production forecast	189.7 million bags, according to the USDA	Bearish

Figures reflect the latest data provided for this market assessment; production and inventory figures refer to different reporting periods.

Price Action and Market Structure

December arabica coffee futures fell 3.65 points, or 1.25%, while November robusta futures declined 62 points, or 1.78%. The losses extend a two-session retreat as the market reassesses the likelihood of increased export availability from the world’s leading producing countries.

The pullback follows a sharp recovery earlier in the week. Arabica reached a one-month high and robusta climbed to a six-week high as the Brazilian real strengthened against the US dollar. A stronger real can discourage Brazilian producers from selling coffee for export because dollar-denominated sales become less attractive when converted into the domestic currency.

That currency support has not prevented the latest decline. With Brazil’s harvest approaching completion and exports accelerating, the market is increasingly focused on the volume of coffee entering international trade.

The two contracts also face different supply dynamics. Arabica remains sensitive to Brazil’s flowering conditions and historically low exchange-certified inventories. Robusta faces additional pressure from strong Vietnamese export growth and rising ICE stocks, although substantial speculative short positions could make its price movements more volatile.

Brazil’s Export Recovery Adds to Global Availability

Brazil’s expanding export flows are a central bearish influence for coffee prices. The country’s Trade Ministry reported that September coffee exports increased by more than 20% year-on-year to 236,000 metric tonnes.

Earlier figures also show a substantial increase in shipments as the Brazilian harvest moves through its export phase. Brazil’s total coffee exports in August rose 31% year-on-year to a record 4.155 million bags for the month, according to Cecafé. Arabica exports increased 26% to 2.87 million bags, while robusta exports climbed 54% to 953,592 bags.

Separate Trade Ministry figures showed August exports rising 44.6% year-on-year to 206,618 metric tonnes, the highest monthly volume in eight months.

These increases indicate that a substantial volume of Brazilian coffee is reaching international buyers. The resulting availability can limit price recoveries, particularly if importers have sufficient stocks and do not need to compete aggressively for immediate supplies.

The production outlook adds to this pressure. On September 24, Brazil’s crop forecasting agency, Conab, raised its 2026 coffee production estimate to 67.6 million bags from 66.7 million bags.

Arabica production is forecast to increase 34.8% year-on-year to 48.21 million bags, while robusta production is expected to decline 6.6% to 19.39 million bags. The projected contrast is important: Brazil’s expanding arabica crop could weigh on arabica prices even as lower domestic robusta production provides some offset for that variety.

A separate USDA forecast published in June projected a record Brazilian 2026/27 crop of 71.9 million bags, up 14% year-on-year. Differences between these estimates reflect distinct forecasting assessments and should not be treated as interchangeable figures.

Vietnam’s Robusta Supply Strengthens the Bearish Case

Vietnam, the world’s largest robusta producer, is another major source of downward pressure.

Vietnam’s National Statistics Office reported that September coffee exports increased 53% year-on-year to 124,000 metric tonnes. Shipments for January through September rose 16.2% to 1.45 million metric tonnes, following a 17.5% increase in total exports during 2025 to 1.58 million metric tonnes.

Production forecasts also point to improved availability. Vietnam’s 2025/26 coffee output is projected to increase 6% year-on-year to a four-year high of 1.76 million metric tonnes, equivalent to approximately 29.4 million bags.

Higher exports and a larger crop can give roasters and other buyers more flexibility in sourcing robusta. This may reduce the urgency to secure additional supplies at higher prices, especially while exchange inventories are also increasing.

Weather remains a countervailing factor. Recent abundant rainfall in Vietnam’s Central Highlands has improved soil moisture and is expected to support coffee cherry development. If these conditions continue, they could help production and reinforce the bearish supply outlook. If weather conditions deteriorate later in the growing cycle, however, the outlook could change.

Global Production Forecasts Point to a Surplus

The broader supply outlook remains a major obstacle to a sustained rally.

On September 10, the International Coffee Organization projected 2025/26 global production at a record 183.6 million bags, an increase of 4.4% year-on-year. Consumption was forecast to decline 0.9% to 180.6 million bags, leaving a projected global surplus of 3 million bags—the first surplus in five years.

The USDA’s July 22 assessment was more expansive for the following season. It projected global coffee production in 2026/27 to rise 6%, or 10.8 million bags, to a record 189.7 million bags. The forecast included a 12% increase in global arabica production, while robusta output was expected to fall 0.7%. Global ending stocks were projected to increase by 1.9 million bags to 26.3 million bags.

These estimates suggest that the market could move into a period of greater availability, provided the projected crops are realised and weather does not materially disrupt production.

However, production forecasts are not guaranteed outcomes. The timing and quality of rainfall, flowering success, crop development and the eventual pace of exports will determine how much of the anticipated supply reaches the market.

El Niño Creates a Significant Weather Risk

The potential development of a strong El Niño pattern is one of the most important bullish risks for coffee prices.

Coffee trader Commercial has warned that El Niño could delay rainfall in Brazil during September and October, a critical period for flowering. Inadequate or poorly timed rainfall could affect flowering and reduce the potential size of Brazil’s 2026/27 crop.

The US Climate Prediction Center previously indicated that the El Niño pattern emerging across the equatorial Pacific could become one of the strongest in more than 75 years. Such conditions can increase the risk of drought, flooding and unusual temperature fluctuations across producing regions in South America and Asia.

For coffee, the impact depends on where and when these conditions develop. Insufficient rainfall during flowering may limit fruit formation, while excessive rain can interfere with fieldwork, increase disease pressure or affect harvest operations.

The immediate evidence from Brazil, however, is not uniformly negative. Somar Meteorologia reported that Minas Gerais received 33.3 millimetres of rainfall during the week ending October 4, equivalent to 104% of the historical average. This is potentially beneficial for the flowering stage and next year’s harvest.

The market therefore faces a key uncertainty: whether favourable rainfall can sustain crop development or whether an emerging El Niño pattern will disrupt production later in the season.

Arabica Inventories Remain a Key Price Support

Exchange inventories provide a more mixed signal.

ICE arabica inventories fell to a 27-year low of 217,646 bags on September 15 before rebounding to 260,654 bags in the latest cited report, a two-month high. Although the recovery is bearish at the margin, inventories remain low relative to the historical level identified in the supplied data.

Tight certified stocks can support arabica prices if buyers require prompt delivery and the flow of exchange-eligible coffee fails to keep pace with demand. This could limit the downside even as Brazil’s production and exports increase.

Robusta inventories tell a different story. ICE robusta stocks climbed to a ten-month high of 5,398 lots on September 24. Rising inventories, combined with stronger Vietnamese exports, reinforce the view that near-term robusta availability is improving.

The distinction between the two markets is important. Arabica may retain more support from inventory constraints, while robusta remains more exposed to the combination of export growth and increasing exchange stocks.

Currency Markets and Coffee Export Incentives

The Brazilian real remains an important variable for both coffee prices and producer selling behaviour.

The real reached a 4.75-month high against the US dollar on Tuesday, temporarily discouraging Brazilian coffee producers from increasing export sales. A stronger real can reduce the domestic-currency proceeds generated by dollar-denominated exports, potentially slowing selling activity and supporting futures.

However, the effect can be temporary. When export commitments, harvest logistics and available inventories encourage shipments, higher volumes can still reach international markets despite an unfavourable exchange rate.

For traders, the relationship between the real and coffee prices is therefore conditional rather than automatic. Currency strength may restrict selling at the margin, but it does not remove the bearish impact of a larger crop or sustained export growth.

A weaker real could make Brazilian exports more attractive and add to supply pressure. Conversely, further currency appreciation may help limit producer selling and provide some support to arabica prices.

Speculative Positioning Could Amplify a Robusta Rebound

Robusta’s positioning profile introduces an additional source of volatility.

The latest cited weekly Commitment of Traders report showed commodity funds increasing their net-short position in robusta futures by 2,658 contracts during the week ended September 29, bringing the total to a 13-month high of 3,959 net-short positions.

Heavy short positioning can reinforce downward momentum when fundamental news remains bearish. However, it can also increase the potential for a short-covering rally if prices rise unexpectedly or a significant supply concern emerges.

A weather-related disruption, an interruption to export flows or a stronger-than-expected improvement in buying interest could prompt some traders to close short positions. Such activity may accelerate a rebound even before the underlying supply-demand balance changes materially.

This does not guarantee a rally. It means that robusta could experience sharper two-way price movements if a new catalyst challenges the prevailing bearish outlook.

Bullish Scenario: Weather Risks and Tight Arabica Stocks Support Prices

Coffee prices could stabilise or recover if weather concerns begin to outweigh expectations of abundant supply.

The principal bullish factors are:

• El Niño disruption: Delayed rainfall or adverse weather during Brazil’s flowering period could reduce the potential 2026/27 crop.
• Arabica inventory constraints: ICE arabica stocks remain relatively low despite the recent recovery.
• Currency support: A stronger Brazilian real could discourage producers from selling coffee for export.
• Robusta short covering: The elevated net-short position could amplify a price rebound if bullish news emerges.
• Production forecast revisions: Evidence that the anticipated global crop is too optimistic could prompt traders to reassess the surplus outlook.

For this scenario to gain traction, the market would need evidence that weather conditions are deteriorating, exports are slowing or projected production is at risk. Weather concerns alone may struggle to sustain a rally while Brazilian and Vietnamese shipments remain strong.

Bearish Scenario: Record Production and Strong Exports Extend the Decline

The bearish scenario remains centred on continued growth in available supply.

Factors that could extend the decline include:

• Brazilian export momentum: Larger shipments from the world’s leading producer could increase availability for international buyers.
• Vietnamese robusta exports: Strong year-on-year growth in shipments could keep pressure on robusta futures.
• Record global production: The ICO and USDA projections indicate the potential for a substantial supply base across the next two seasons.
• Improved growing conditions: Adequate rainfall in Brazil and Vietnam could support flowering, cherry development and harvest prospects.
• Rising robusta inventories: Higher exchange stocks could reduce concerns about immediate supply tightness.

If these factors persist, recent price rallies may prove temporary. Robusta appears particularly exposed to rising exports and inventories, while arabica’s downside could be moderated by its tighter certified-stock position and the sensitivity of Brazil’s flowering cycle to rainfall.

Coffee Price Outlook

The near-term outlook remains cautious, with the balance of risks tilted towards further consolidation or weakness while exports and production forecasts point to greater availability.

Arabica’s direction will depend on whether Brazilian supply growth outweighs low exchange inventories and concerns about the next crop. A continuation of favourable rainfall could reinforce the bearish case, whereas delayed or erratic precipitation could revive concerns about future production and support prices.

Robusta faces a more direct supply challenge from Vietnam’s expanding exports and rising ICE inventories. Nevertheless, its substantial speculative net-short position could increase the scale of any recovery triggered by unexpected bullish developments.

Rather than assuming that the current decline will continue uninterrupted, traders should monitor whether futures can stabilise as new supply enters the market. A sustained recovery would require stronger evidence of supply disruption, inventory tightening or improved demand.

Supply Outlook

Supply is expected to remain ample in the near term as Brazil’s harvest feeds export markets and Vietnam continues to ship larger volumes. The upward revision to Conab’s 2026 Brazilian crop estimate, combined with the USDA’s record global production forecast, reinforces the potential for greater availability during the next marketing cycle.

The principal risk is weather. Brazil’s flowering period and Vietnam’s cherry development remain important indicators for future production. If El Niño causes material disruption, current estimates may need to be revised.

Exchange inventories should also be monitored closely. Continued growth in robusta stocks would reinforce bearish conditions, while a renewed decline in arabica stocks could help preserve a relative price premium.

Demand Outlook

The supplied production and export data point to a market in which supply growth is outpacing the bullish influence of near-term weather concerns. The ICO’s forecast of a 0.9% decline in 2025/26 consumption also suggests limited demand-side support relative to the projected increase in production.

Actual buying activity will be important in determining whether the anticipated surplus translates into persistent downward pressure. If importers and roasters have adequate coverage, they may be less inclined to compete aggressively for prompt shipments. Conversely, a recovery in buying interest combined with lower available inventories could help absorb additional supply.

The market will need to distinguish between coffee that is forecast to be produced and coffee that is actually exported, stored or consumed. These flows may not occur at the same pace.

Louis Roche Analysis

The key issue for coffee is whether the market is pricing a supply recovery that is already visible in export data or a potential crop disruption that has yet to materialise.

At present, Brazil and Vietnam are delivering clear evidence of stronger export availability, while the production outlook points towards a record global crop. These factors make it difficult for a sustained rally to develop without a meaningful change in fundamentals.

However, coffee remains particularly sensitive to weather during critical crop-development stages. Brazil’s flowering period creates a point of uncertainty for arabica, while the evolution of conditions across Asian producing regions matters for robusta. The market could therefore remain vulnerable to sudden price swings even when the broader supply outlook appears bearish.

Arabica and robusta should not be treated as identical trades. Arabica has some support from historically low certified inventories, while robusta faces more direct pressure from rising inventories and strong Vietnamese exports. In robusta, elevated speculative short positioning adds the possibility of a sharp technical rebound if new information challenges the prevailing outlook.

The next directional move is likely to depend on the interaction between physical export flows, exchange inventories, the Brazilian real and weather developments. Until there is clearer evidence of a production shortfall or stronger demand, rallies may encounter selling pressure. That assessment would need to be reconsidered if rainfall deteriorates or crop forecasts are reduced.

Coming Sessions: Key Market Drivers

Traders should focus on the following developments:

1. Brazilian rainfall and flowering: Monitor whether precipitation remains supportive or becomes erratic during the critical development period.
2. Brazilian export volumes: Further strong shipments would reinforce the near-term supply outlook; a material slowdown could reduce selling pressure.
3. Vietnamese exports and crop conditions: Continued export growth and favourable cherry development would remain bearish for robusta.
4. ICE inventories: Watch whether arabica stocks resume declining and whether robusta inventories continue to increase.
5. Brazilian real movements: Currency appreciation could discourage producer selling, while depreciation may support export competitiveness.
6. El Niño forecasts: Changes in the expected strength, timing or regional impact of the weather pattern could prompt revisions to crop estimates.
7. Speculative positioning: Robusta’s elevated net-short position may amplify reactions to unexpected supply or weather developments.

Today Markets View

Coffee remains exposed to near-term downside pressure as Brazil and Vietnam increase export availability and major agencies project record or near-record production. The bearish case is most pronounced in robusta, where growing Vietnamese shipments and higher ICE inventories are reinforced by the broader supply outlook.

Arabica has a more balanced risk profile because historically low certified inventories and potential El Niño disruption could offset part of Brazil’s expected production increase. The latest rainfall data from Minas Gerais is currently supportive of crop development, but conditions over the coming weeks remain important.

The market outlook is therefore conditional: continued favourable weather and strong exports would support further weakness, while deteriorating crop conditions, inventory tightening or short covering could produce a recovery. Confirmation from physical market data will be more important than relying on futures momentum alone.

Currency Hedger View

Coffee prices are influenced not only by harvest volumes, inventories and demand but also by exchange-rate movements in major producing countries. Changes in the Brazilian real can affect exporter competitiveness and the incentives for producers to sell into international markets, while broader currency movements can alter the cost of imported coffee for buyers.

For importers, roasters and other businesses exposed to coffee-related payments, currency volatility can affect landed costs even when the commodity price itself is stable. Monitoring foreign exchange alongside commodity fundamentals can help businesses assess their exposure to changing purchase costs and international payment obligations.

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Contributor: Today Markets, with Currency Hedger contributing foreign-exchange perspective.

Disclaimer: Market analysis prepared for Today Markets. For informational purposes only and not intended as investment, trading, financial or commodity advice.