Coffee prices are under pressure from a sharp decline in the Brazilian real, rising export volumes and expectations for a larger global harvest. However, falling ICE arabica inventories and potential weather disruption across Brazil and Vietnam are providing important support, leaving the market caught between abundant near-term supply and uncertainty over the next crop cycle.

December New York arabica coffee futures (KCZ26) fell 6.50 points, or 2.11%, while November London robusta futures (RMX26) declined 34 points, or 1.05%. The latest losses reflect concerns that exporters may accelerate sales as currency conditions change, while improving growing conditions in major producing countries could increase future availability.

The key question for traders is whether expectations of a record global crop will outweigh tightening arabica exchange inventories and the possibility that a powerful El Niño weather pattern could disrupt production in the 2026/27 season.

Market Snapshot

Market indicator	Latest reported position
New York arabica futures	December contract down 6.50 points (2.11%)
London robusta futures	November contract down 34 points (1.05%)
ICE arabica inventories	225,610 bags, a six-week low
ICE robusta inventories	Recently reached a 13-month high of 6,612 lots before falling to 2,607 lots
Brazil rainfall	29.6 mm in Minas Gerais during the week ended October 25
Brazil September coffee exports	236,000 MT, up more than 20% year-on-year
Brazil 2026 coffee production estimate	67.6 million bags
Vietnam September coffee exports	124,000 MT, up 53% year-on-year
Vietnam January–September 2026 exports	1.45 MMT, up 16.2% year-on-year
Colombia 2025/26 production	12.65 million bags, down 15% year-on-year
Global 2025/26 production forecast	Record 183.6 million bags
Global 2025/26 consumption forecast	180.6 million bags
Estimated global 2025/26 surplus	3 million bags
USDA global 2026/27 production forecast	Record 189.7 million bags

Figures are based on the supplied market report. No additional settlement prices have been assumed.

Coffee Price Action: Brazilian Real Weakness Encourages Selling

Both arabica and robusta coffee futures declined as the Brazilian real weakened sharply following the reported Brazilian presidential election result.

A weaker real can increase the incentive for Brazilian exporters to sell coffee at prevailing dollar-denominated prices. When dollar proceeds are converted into local currency, exporters receive more reais for the same dollar revenue, potentially encouraging sales and increasing export availability.

Brazil is the world’s largest coffee producer and exporter, accounting for approximately 36% of global production and 34–38% of world exports, according to the supplied report. Currency movements in Brazil can therefore have a significant influence on international coffee prices.

The decline in both major contracts highlights the market’s sensitivity to export incentives and expectations for future supply. However, currency-driven selling does not necessarily mean that underlying production conditions have improved. It can increase near-term selling pressure even when weather or crop risks remain unresolved.

For traders, the next consideration is whether Brazilian export flows remain elevated and whether the currency weakness is accompanied by further increases in exchange inventories.

ICE Coffee Inventories: Arabica and Robusta Send Different Signals

Exchange inventory trends are providing a mixed picture for the coffee market.

Arabica stocks approach historically low levels

ICE arabica inventories fell to 225,610 bags, a six-week low. This brings stocks closer to the 27-year low of 217,646 bags reported on September 15.

Low exchange inventories can support prices by reducing the immediately available supply of deliverable coffee. If export availability tightens or demand improves, limited stocks could make the arabica market more sensitive to supply disruptions.

The inventory decline is therefore a bullish factor, particularly if it continues while Brazilian exports and global production expectations are being reassessed.

Robusta inventories remain under pressure

Robusta inventories have moved in the opposite direction over the recent period. Stocks reportedly climbed to a 13-month high of 6,612 lots before falling to 2,607 lots on Monday.

The earlier increase points to greater availability within the exchange-tracked supply system, potentially weighing on robusta futures. The subsequent decline is a development to monitor, but one lower reading does not establish that the broader inventory trend has reversed.

The distinction between arabica and robusta is important: low arabica stocks may provide support to one segment of the market while stronger robusta availability weighs on another.

Brazil Coffee Production: Rainfall Supports the Next Crop Outlook

Weather conditions in Brazil are a major influence on expectations for the next arabica harvest.

Somar Meteorologia reported that Minas Gerais received 29.6 mm of rainfall during the week ended October 25, equivalent to 82% of its historical average. Minas Gerais is Brazil’s principal arabica-growing region.

The broader concern is that above-normal or well-distributed rainfall during the critical flowering stage could support the development of the 2026/27 crop. Improved flowering and subsequent cherry development may increase future production, placing downward pressure on prices if the expected harvest becomes larger.

Brazil’s crop outlook is already a significant bearish factor. Conab raised its 2026 production estimate to 67.6 million bags from 66.7 million bags. Within that forecast, arabica production is expected to rise 34.8% year-on-year to 48.21 million bags, while robusta output is projected to fall 6.6% to 19.39 million bags.

The expected increase in arabica production is particularly important for New York futures. If the larger crop materialises, it could help replenish supplies and ease some of the pressure associated with historically low arabica inventories.

Nevertheless, rainfall totals alone cannot guarantee a larger harvest. Flowering, fruit development, subsequent weather and the timing of harvesting will all influence the final outcome.

Vietnam Coffee Supply: Better Growing Conditions and Higher Exports

Vietnam remains central to the robusta market as the world’s largest robusta producer.

Recent rainfall has improved soil moisture conditions in the Central Highlands, Vietnam’s largest coffee-producing region. Forecaster Vaisala indicated that the abundant rains should support coffee-cherry development.

This is a bearish factor for robusta prices because improved growing conditions can support yields and future export availability. The impact will depend on how conditions develop through the remainder of the crop cycle, particularly if the region subsequently experiences the drought risk associated with El Niño.

Export data also points to stronger supply flows. Vietnam’s September coffee exports rose 53% year-on-year to 124,000 MT, while exports from January through September increased 16.2% to 1.45 million metric tonnes. Vietnam’s full-year 2025 exports also rose 17.5% to 1.58 MMT.

Vietnam’s 2025/26 coffee production is projected to increase 6% year-on-year to 1.76 MMT, equivalent to 29.4 million bags. If the production forecast and higher export flows are sustained, they could add to the supply pressure facing robusta futures.

For traders, the main issue is whether the current improvement in availability continues or whether subsequent weather conditions undermine the expected harvest.

El Niño Risk: Potential Threat to Brazil and Vietnam

Despite favourable growing conditions in major producing regions, weather remains one of the largest uncertainties facing the coffee market.

The emerging El Niño pattern could bring adverse conditions to Brazil and Vietnam, potentially affecting production during the 2026/27 season. Vietnam’s Agriculture Ministry has warned that the Central Highlands could face El Niño-related drought later this year and in early 2027.

A prolonged dry spell could reduce soil moisture, stress coffee trees and affect cherry development. In Brazil, the impact would depend on the timing of rainfall changes relative to flowering and fruit development.

This creates a tension between current crop expectations and future weather risk. Recent rainfall and higher production forecasts are bearish, but a later deterioration in conditions could reduce yields or undermine the anticipated supply recovery.

The market is therefore likely to remain sensitive to updated weather forecasts and evidence of how the crops respond. El Niño represents a risk rather than a guaranteed production decline, and its eventual impact will depend on regional conditions and timing.

Colombia Coffee Production: Lower Output Tightens Arabica Supply

Colombia, the world’s second-largest arabica producer, is providing a counterweight to expectations for higher Brazilian production.

The Colombian Coffee Federation reported that production during the 2025/26 October-to-September season fell 15% year-on-year to 12.65 million bags. Coffee exports also declined 12% to 11.78 million bags.

Lower production and exports from Colombia may reduce the availability of Colombian arabica and contribute to tighter supply in parts of the market. This is particularly relevant when ICE arabica inventories are already near historically low levels.

However, the effect on overall coffee prices depends on whether lower Colombian supply is offset by larger production and exports from Brazil and other origins. A decline in one producing country does not necessarily outweigh an increase in global production.

The next Colombian production and export figures will help establish whether the country’s supply shortfall persists.

Global Coffee Balance: Record Production and a Surplus Weigh on Prices

The broader global supply outlook remains a major bearish influence.

The International Coffee Organization projected that global coffee production in 2025/26 would rise 4.4% year-on-year to a record 183.6 million bags. Consumption was forecast to fall 0.9% to 180.6 million bags, leaving a projected surplus of 3 million bags.

A surplus indicates that forecast production exceeds forecast consumption. If realised, this can ease competition for available beans and reduce the urgency among buyers to secure additional supplies.

The USDA’s July forecast was also bearish. It projected global coffee output in 2026/27 to rise 6% year-on-year, an increase of 10.8 million bags, to a record 189.7 million bags. Global arabica production was expected to increase 12%, while robusta output was forecast to decline 0.7%. World ending stocks were projected to increase by 1.9 million bags to 26.3 million bags.

The USDA’s Foreign Agricultural Service separately forecast a record Brazilian crop of 71.9 million bags for 2026/27, up 14% year-on-year. This differs from Conab’s 67.6-million-bag estimate for Brazil’s 2026 crop; the figures reflect different forecasts and crop-year framing and should not be treated as directly interchangeable.

The broad message is that official forecasts anticipate a substantial increase in global supply. If those expectations are confirmed, they could limit price recoveries unless demand improves or weather-related losses reduce production.

Bullish Sentiment

1. Arabica inventories remain historically low: ICE arabica stocks have fallen to a six-week low and are approaching the 27-year low recorded in September.
2. El Niño could disrupt future production: Potential drought in Vietnam and adverse weather in Brazil could threaten yields during the next crop cycle.
3. Colombian production has declined: Lower output and exports from a major arabica producer could tighten regional availability.
4. Brazilian arabica remains weather-sensitive: Any deterioration in flowering, rainfall or cherry development could undermine expectations for a larger harvest.
5. Robusta inventories have retreated from their recent peak: The reported decline from 6,612 lots to 2,607 lots warrants monitoring for evidence of a sustained tightening trend.

Bearish Sentiment

1. Brazil’s expected arabica crop is larger: Conab forecasts a 34.8% year-on-year increase in 2026 arabica production to 48.21 million bags.
2. Global production is forecast to reach a record: The USDA expects 2026/27 output to increase to 189.7 million bags.
3. The global market is forecast to be in surplus: The ICO’s 2025/26 estimates point to production exceeding consumption by 3 million bags.
4. Brazilian exports have increased: September exports reportedly rose more than 20% year-on-year to 236,000 MT.
5. Vietnamese exports are growing: September shipments rose 53% year-on-year, while January-to-September exports increased 16.2%.
6. Growing conditions have recently improved: Rainfall in Brazil and Vietnam is supporting crop development and could improve next season’s supply.
7. A weaker Brazilian real encourages selling: Currency depreciation can make exports more attractive to Brazilian producers and traders, increasing near-term selling pressure.

Coffee Price Forecast: What Traders Are Watching

The near-term outlook remains vulnerable to further weakness if Brazilian and Vietnamese export flows remain strong and forecasts for record global production continue to shape sentiment. Rising supply expectations could outweigh short-term concerns about low arabica stocks, especially if demand fails to accelerate.

However, the medium-term outlook is less certain. Arabica inventories are close to historically low levels, Colombian production has declined and El Niño could threaten future harvests in Brazil and Vietnam.

The following developments are likely to be particularly important:

• Brazilian weather: Rainfall during flowering and cherry development will help determine whether the expected increase in arabica production is achieved.
• Brazilian export volumes: Continued growth in shipments could reinforce the bearish supply narrative.
• Vietnamese production and exports: Stronger robusta availability may keep London futures under pressure, while any deterioration in growing conditions could change expectations.
• ICE inventories: Further declines in arabica stocks could support New York futures, while sustained robusta stock accumulation could weigh on London prices.
• El Niño forecasts: Evidence of drought or adverse weather in producing regions could prompt revisions to crop estimates.
• Global production and consumption: The balance between the expected record crop and actual demand will determine whether the forecast surplus materialises.

The supplied data does not establish specific technical support or resistance levels. Traders should assess current contract charts and market levels separately rather than infer them from the reported percentage changes.

Supply Outlook

Coffee supply is expected to increase substantially, led by Brazil and supported by stronger exports from Vietnam. The prospect of a larger Brazilian arabica crop is especially important because it could ease some of the tightness reflected in low ICE arabica inventories.

However, supply is not expanding uniformly. Colombia has reported lower production and exports, while El Niño introduces uncertainty around the next crop cycle in Brazil and Vietnam.

The critical issue is whether higher production forecasts translate into actual harvests and export shipments. If the expected surplus develops, prices may remain under pressure. If weather-related disruption reduces output, the market could become tighter than current forecasts suggest.

Demand Outlook

The supplied figures point to a global market in which forecast production exceeds consumption. The ICO expects consumption to decline in 2025/26, while the USDA anticipates a record harvest in 2026/27.

If consumption remains subdued while production expands, buyers may have less incentive to compete aggressively for supplies. This could limit the upside for both arabica and robusta futures.

Nevertheless, demand must be considered alongside the type and location of available coffee. Arabica and robusta serve different market segments, and changes in inventories or production in one variety do not always translate directly into equivalent changes in the other.

The coming months will reveal whether demand absorbs the expected increase in supply or whether the forecast surplus puts sustained downward pressure on prices.

Market Outlook for the Coming Sessions

Coffee prices face competing forces. Near-term bearish pressure comes from the weaker Brazilian real, higher exports from Brazil and Vietnam, favourable growing conditions and forecasts for record global production. These factors support the possibility of further weakness if supply expectations continue to improve.

Against this, arabica inventories remain close to historically low levels, Colombian output has declined and El Niño presents a risk to the next harvest in key producing countries.

In the coming sessions, traders should monitor export data, ICE inventory changes and weather developments rather than relying on the global surplus forecast alone. A continuation of strong shipments and favourable growing conditions would reinforce the bearish case. Conversely, falling arabica stocks or credible evidence of weather-related crop damage could provide support.

The current balance favours caution: near-term supply expectations are bearish, but the outlook could change if adverse weather disrupts the next production cycle.

Currency Hedger View

Coffee illustrates how exchange rates, export incentives, inventories and weather can combine to influence commodity prices.

The weaker Brazilian real may encourage exporters to sell, while rising production forecasts and stronger shipments from Brazil and Vietnam are adding to expectations of greater availability. At the same time, historically low arabica inventories and potential El Niño disruption create risks that could affect future supply.

For coffee importers, roasters, traders and other businesses exposed to international commodity purchases, price movements can affect procurement budgets, inventory values and commercial margins. Where purchases or sales are denominated in foreign currencies, exchange-rate movements can add another layer of uncertainty.

A structured risk review can help businesses identify commodity and currency exposures and consider whether suitable hedging arrangements may support more predictable cash flows. Hedging involves costs and risks and does not eliminate all market exposure.

Businesses looking to assess their international currency exposure can open a Currency Hedger account or visit currencyhedger.com.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, a trading recommendation or a solicitation to buy or sell any financial instrument. Commodity and foreign-exchange markets are volatile, and forecasts may not materialise. Hedging involves costs and risks and may not be suitable for every business or investor.