Today Markets Analysis: Coffee futures extended their three-week decline on Wednesday, with arabica falling to a 2.5-month low as expectations for abundant global supplies continue to outweigh support from historically low arabica inventories and potential El Niño-related crop risks.

December ICE NY Arabica coffee closed at 281.10 cents per pound, down 2.10 points, or 0.74%, while November ICE Robusta coffee fell 51 points to 3,419, down 1.47%.

The market is being pressured by forecasts for record global production, strong Brazilian exports, improving growing conditions in Brazil and Vietnam, and rising robusta inventories. However, ICE arabica stocks have fallen to their lowest level in 27 years, creating an important bullish counterweight.

Coffee Futures Remain Under Pressure

Both major coffee contracts declined on Wednesday, extending the market’s three-week retreat.

Contract	Close	Change
Dec 2026 Arabica Coffee	281.10¢/lb	-2.10
Nov 2026 Robusta Coffee	3,419	-51

Arabica has now fallen to a 2.5-month low, while robusta recently reached a three-month low as traders increasingly focus on improving global supply prospects.

The contrast between extremely low arabica inventories and expectations for record future production is becoming one of the market’s most important themes.

Bullish Sentiment

Several factors could provide support for coffee prices:

• ICE arabica inventories fell to just 217,646 bags, the lowest level in 27 years.
• El Niño could disrupt Brazil’s 2026/27 crop if it delays rainfall during the critical September-October flowering period.
• Brazil’s next crop remains vulnerable to weather volatility, particularly if rainfall patterns become erratic during flowering and fruit development.
• The US Climate Prediction Center has warned that the current El Niño pattern could become one of the strongest in more than 75 years.
• A combination of floods, droughts and temperature fluctuations could create production risks across South America and Asia.
• Extremely low arabica exchange stocks could become increasingly significant if physical demand strengthens or the next Brazilian crop disappoints.
• Any deterioration in Brazil’s flowering conditions could quickly change expectations surrounding the currently projected record 2026/27 crop.

These factors mean that the current bearish supply narrative remains vulnerable to a significant weather-driven reversal.

Bearish Sentiment

The immediate fundamentals remain heavily weighted toward increased supply:

• The International Coffee Organization expects record 2025/26 global production of 183.6 million bags, up 4.4% year on year.
• ICO expects global consumption to fall 0.9% to 180.6 million bags, creating a 3 million-bag global surplus.
• The surplus would be the first global coffee surplus in five years.
• USDA forecasts 2026/27 global production to rise 6.0% to a record 189.7 million bags.
• USDA expects global arabica production to increase 12% year on year.
• USDA forecasts global ending stocks to increase by 1.9 million bags to 26.3 million bags.
• Brazil’s 2026/27 crop is forecast by USDA at a record 71.9 million bags, up 14%.
• Brazil’s August coffee exports reached a record 4.155 million bags, up 31% year on year.
• Vietnam’s January-August 2026 coffee exports increased 13.7% to 1.33 MMT.
• ICE robusta inventories increased to a 9.5-month high of 5,043 lots.

The combination of strong current exports and expectations for another record global crop is keeping significant pressure on prices.

Brazil Rainfall Creates a Bearish Supply Signal

Brazil is currently one of the most important factors behind the decline in arabica coffee.

The country’s harvest is nearing completion, meaning increasing volumes are reaching export markets.

At the same time, weather conditions are improving the outlook 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 main arabica-producing region.

The substantial rainfall is potentially beneficial for flowering and early crop development, creating a bearish influence on prices if favourable conditions persist.

However, timing is critical.

Coffee trees require appropriate rainfall during flowering and subsequent fruit development, meaning the market will be closely monitoring whether the current moisture levels translate into improved crop potential.

Brazil Exports Reach Record August Levels

Brazilian exports are adding further supply to the international market.

Cecafé reported that total Brazilian coffee exports in August increased 31% year on year to 4.155 million bags, the highest August total on record.

Arabica exports increased 26% to 2.87 million bags, while robusta exports jumped 54% to 953,592 bags.

Brazil’s Trade Ministry separately reported that August coffee exports increased 44.6% year on year to 206,618 tonnes, the highest level in eight months.

The increase in exports comes as the Brazilian harvest concludes, creating additional availability at a time when traders are already anticipating higher production during the next season.

This combination represents an important near-term bearish factor.

Vietnam Supplies Continue to Increase

Vietnam is also adding to global coffee availability.

The country is the world’s largest robusta producer, making its export performance particularly important for the robusta market.

Vietnam’s National Statistics Office reported that January-August 2026 coffee exports increased 13.7% year on year to 1.33 MMT.

For full-year 2025, Vietnamese coffee exports increased 17.5% to 1.58 MMT.

Production is also expected to increase.

Vietnam’s 2025/26 coffee production is projected to rise 6% to 1.76 MMT, equivalent to approximately 29.4 million bags.

Improved rainfall has also increased soil moisture across Vietnam’s Central Highlands, supporting cherry development in the country’s most important coffee-growing region.

For robusta traders, the combination of higher exports, rising production and increasing exchange inventories remains a significant bearish signal.

Arabica and Robusta Inventories Are Moving in Opposite Directions

Inventory data provides one of the clearest contrasts in the coffee market.

ICE arabica inventories fell to 217,646 bags, their lowest level in 27 years.

That exceptionally low stock level is potentially bullish because it leaves relatively little exchange-certified inventory available to absorb unexpected supply disruptions or stronger demand.

Robusta is showing the opposite trend.

ICE robusta inventories climbed to 5,043 lots, a 9.5-month high.

This divergence helps explain why arabica and robusta can respond differently to the same global supply story.

The market is therefore watching not only total global production, but also where the available coffee is located and what type of coffee is available.

El Niño Creates a Major Weather Wildcard

Weather remains the largest potential challenge to the bearish production narrative.

The current El Niño pattern could affect coffee-growing regions in both South America and Asia.

For Brazil, coffee traders are particularly focused on September and October because rainfall during this period is important for flowering.

Commercial has warned that El Niño could delay Brazilian rains during this critical period, potentially damaging the 2026/27 crop.

The US Climate Prediction Center has also said that the current El Niño could become one of the strongest in more than 75 years.

If the weather pattern produces prolonged drought, excessive rainfall or damaging temperature fluctuations, current record-production forecasts could be revised lower.

For now, however, favourable rainfall in key Brazilian growing areas is providing the market with a more comfortable supply outlook.

Global Production Forecasts Point to Abundant Supply

The global production outlook remains the strongest bearish argument.

The ICO expects 2025/26 production to reach a record 183.6 million bags, up 4.4% year on year.

At the same time, consumption is expected to decline 0.9% to 180.6 million bags.

That leaves an estimated 3 million-bag surplus, the first global surplus in five years.

The USDA’s outlook for 2026/27 is even larger.

It forecasts global production of 189.7 million bags, an increase of 6% and another record.

The USDA expects arabica production to increase 12%, although robusta output is forecast to decline slightly.

World ending stocks are also expected to increase to 26.3 million bags.

The scale of these forecasts means that coffee prices will need evidence of either stronger demand or production disruption to overcome the current supply narrative.

USDA Brazil Forecast Highlights Production Potential

Brazil is at the centre of the USDA’s bullish-production assumption.

The USDA forecasts a record 71.9 million-bag Brazilian crop for 2026/27, up 14% from the previous season.

This forecast is based largely on improved growing conditions.

If realised, the increase would represent a substantial addition to global arabica availability.

However, the forecast remains dependent on weather conditions over the coming months.

The September-October flowering period is particularly important, meaning traders will continue to compare actual rainfall and crop development against the assumptions embedded in the USDA forecast.

Demand Signals Remain Secondary to Supply

The current price decline is being driven primarily by the supply outlook rather than a dramatic collapse in consumption.

The ICO expects global consumption to decline 0.9% in 2025/26, contributing to the projected 3 million-bag surplus.

If demand remains softer while production reaches record levels, the surplus could persist.

However, coffee consumption is relatively resilient in many major markets, meaning a significant improvement in demand could change the balance.

The market will therefore be watching consumption estimates alongside production and inventories as the new season develops.

What Traders Are Watching Next

The next phase of the coffee market is likely to revolve around several competing forces:

1. Brazilian flowering conditions — particularly rainfall during September and October.
2. Brazil’s 2026/27 crop potential — and whether the USDA’s 71.9 million-bag forecast remains achievable.
3. ICE arabica inventories — whether the 27-year low continues to decline.
4. Vietnamese production and exports — particularly for robusta.
5. ICE robusta inventories — whether stocks continue rising.
6. Global production forecasts — especially the projected 189.7 million-bag USDA crop.
7. Global consumption — and whether demand begins closing the projected surplus.
8. El Niño developments — including rainfall and temperature effects across Brazil and Asia.
9. Brazilian export volumes — following the record August shipments.
10. The arabica-ro​busta supply balance — as the two markets continue to show different inventory trends.

A continuation of favourable weather and strong exports would reinforce the current bearish supply narrative.

Conversely, a deterioration in Brazilian flowering conditions combined with further declines in arabica inventories could provide a foundation for a recovery.

Currency Hedger View

Currency movements can have a significant influence on coffee pricing because the global coffee trade is predominantly conducted in US dollars.

For Brazilian and Vietnamese producers, exchange-rate movements can alter the local-currency value of export revenues and influence the incentive to sell physical coffee into international markets.

For international roasters, importers and traders, currency volatility can simultaneously affect the effective cost of coffee purchases.

The current combination of volatile commodity prices and changing currency conditions therefore makes commodity exposure and FX exposure closely connected.

Currency Hedger provides specialist foreign-exchange and currency-risk analysis for businesses managing international payments and currency exposure.

Market analysis contributed by Currency Hedger, an Octalas Group division specialising in foreign exchange, currency risk and hedging.

Today Markets View

Coffee is currently facing a strong supply-driven bearish narrative, with record global production forecasts, strong Brazilian exports and improving growing conditions in Brazil and Vietnam weighing heavily on futures.

However, the market is not without potential sources of support.

ICE arabica inventories are at a 27-year low, while the possibility of El Niño disrupting Brazilian flowering conditions remains a significant medium-term risk.

The key issue is whether the projected record 2026/27 crop materialises.

“Coffee is currently being driven by expectations of abundant supply, but the market is entering a critical weather period for Brazil. Record production forecasts can place significant pressure on prices, yet the exceptionally low arabica inventory level means that any meaningful crop disruption could quickly change the balance.”

— Louis Roche, Analyst, Today Markets

Bottom Line

Coffee futures remain under pressure as record global production forecasts, strong Brazilian exports and improving growing conditions point toward abundant supply.

The bearish case is reinforced by the ICO’s projected 3 million-bag global surplus, USDA expectations for record 2026/27 production and rising robusta inventories.

However, arabica inventories at a 27-year low and the potential for El Niño-related disruption in Brazil provide important counterweights.

The key signals to watch are Brazilian flowering conditions, ICE arabica inventories, Vietnam’s export pace, robusta stocks, global production revisions and the development of El Niño.

Analysis by Louis Roche, Analyst, Today Markets

Market analysis contributed by Currency Hedger, an Octalas Group division specialising in foreign exchange, currency risk and hedging.