Coffee prices are currently under significant pressure as expectations for abundant global supplies continue to outweigh concerns over tight inventories and potential weather risks. December ICE arabica coffee has fallen sharply to around three-month lows, while November ICE robusta has also weakened substantially as rising exchange inventories reinforce the growing supply narrative.
The latest move lower extends a three-week period of weakness in the coffee market. The International Coffee Organization is projecting record global production for 2025/26 and a return to surplus, while the USDA expects another record crop in 2026/27.
At the same time, favourable rainfall across Brazil and Vietnam is improving the outlook for upcoming production. Brazil is entering a critical flowering period for its next arabica crop, while improved soil moisture in Vietnam is supporting robusta cherry development.
The key question for the market is whether the expanding global supply outlook can continue to dominate the bullish influence of historically low arabica inventories and longer-term weather risks.
Coffee Market Snapshot
| Factor | Current Situation | Market Implication |
|---|---|---|
| December NY Arabica | Around three-month lows | Bearish short-term momentum |
| November ICE Robusta | Around three-month lows | Bearish supply pressure |
| Global 2025/26 production | Record 183.6M bags | Bearish |
| Global 2025/26 balance | 3M-bag surplus | Bearish |
| Global 2026/27 production | USDA forecasts record 189.7M bags | Bearish |
| Brazil 2026/27 crop | USDA forecasts 71.9M bags | Bearish |
| Brazil rainfall | 242% of historical average in Minas Gerais | Bearish for prices |
| Vietnam production | 2025/26 forecast at 29.4M bags | Bearish robusta factor |
| Brazil August exports | Record 4.155M bags | Bearish |
| ICE Arabica stocks | 258,415 bags | Tight but recovering |
| ICE Robusta stocks | 5,088 lots | Bearish |
| El Niño | Significant weather risk | Potential bullish counterweight |
Current Coffee Price Action
Coffee prices are currently experiencing a pronounced correction after reaching higher levels earlier in the year.
December arabica has fallen sharply for two consecutive sessions and is now trading around three-month lows. Robusta has also come under heavy selling pressure, with the decline accelerating as exchange inventories increase.
The current market narrative is increasingly centred on supply expansion rather than scarcity.
The ICO’s latest assessment is particularly important because it points to the first global coffee surplus in five years. Production for 2025/26 is estimated at a record 183.6 million bags, up 4.4% year over year, while consumption is expected to decline 0.9% to 180.6 million bags.
That leaves an estimated 3 million-bag surplus.
Looking ahead, the USDA is projecting an even larger production number for 2026/27, creating a significant fundamental headwind for prices if weather conditions remain favourable.
Global Coffee Supply Outlook
The global coffee balance is shifting from a period of tightness toward substantially greater availability.
The ICO expects 2025/26 production to reach a record 183.6 million bags, while consumption is forecast at 180.6 million bags.
The resulting surplus is significant because it represents the first global surplus in five years.
The USDA’s latest outlook reinforces the bearish supply picture. Global 2026/27 coffee production is forecast to rise another 6.0%, or 10.8 million bags, to a record 189.7 million bags.
The USDA expects arabica production to increase approximately 12% year over year, while robusta production is forecast to decline slightly by 0.7%.
Global ending stocks are also expected to rise by approximately 1.9 million bags to 26.3 million bags.
If these forecasts are realised, the market will have considerably more supply available to absorb demand.
Brazil Coffee Production Outlook
Brazil remains the most important variable for the global arabica market.
The country is currently completing its harvest while simultaneously entering the critical flowering period for the next crop.
Recent rainfall has significantly improved the outlook for flowering and future production.
Somar Meteorologia reported approximately 33.4 mm of rainfall in Minas Gerais during the week ending September 20, equivalent to 242% of the historical average.
Minas Gerais is Brazil’s largest arabica-growing region, making rainfall during this stage particularly important.
Under normal conditions, improved moisture availability during flowering can support the development of the next crop and increase production potential.
The USDA’s FAS is already forecasting a record 71.9 million-bag Brazilian crop for 2026/27, up approximately 14% year over year.
The combination of favourable rainfall and a record production forecast is therefore one of the strongest bearish factors currently facing arabica coffee.
Brazilian Coffee Exports
Brazilian exports are reinforcing the picture of abundant current supply.
Cecafé reported that Brazil’s total coffee exports reached 4.155 million bags in August, an increase of 31% year over year and a record for the month.
Arabica exports increased 26% to 2.87 million bags, while robusta exports surged 54% to 953,592 bags.
Separate data from Brazil’s Trade Ministry showed August coffee exports increasing approximately 44.6% year over year to 206,618 MT, the highest level in eight months.
As Brazil’s harvest moves toward completion, more coffee is entering international markets.
That additional export availability is putting pressure on futures prices and reducing some of the scarcity premium that previously supported the market.
Vietnam Coffee Supply Outlook
Vietnam is also contributing to the expanding supply picture, particularly for robusta.
Vietnam is the world’s largest robusta producer, and recent export data indicates strong availability.
Vietnam’s National Statistics Office reported that coffee exports from January through August 2026 increased 13.7% year over year to 1.33 MMT.
Full-year 2025 exports had already increased 17.5% to approximately 1.58 MMT.
The country’s 2025/26 coffee production is forecast to rise approximately 6% to 1.76 MMT, equivalent to around 29.4 million bags, representing a four-year high.
Weather conditions are also currently supportive. Forecaster Vaisala has reported that abundant rainfall has improved soil moisture across Vietnam’s Central Highlands, supporting cherry development.
This is particularly important for robusta, where the combination of stronger exports, higher production expectations and rising inventories is creating substantial downside pressure.
Coffee Inventories
Coffee inventories present a contrasting picture between arabica and robusta.
ICE arabica inventories remain historically low. Stocks fell to just 217,646 bags, a 27-year low, before recovering to approximately 258,415 bags.
Although that recovery has reduced some immediate scarcity concerns, inventories remain low by historical standards.
Robusta inventories tell a very different story.
ICE robusta stocks have climbed to approximately 5,088 lots, the highest level in roughly 9.75 months.
The divergence between the two inventory situations is important.
Arabica retains an underlying physical-market support factor because exchange stocks remain historically constrained. Robusta, however, is facing increasing availability, which is helping accelerate the recent price decline.
El Niño and Coffee Weather Risk
Weather remains the principal factor capable of challenging the current bearish supply narrative.
The US Climate Prediction Center has indicated that the El Niño pattern emerging across the equatorial Pacific could become one of the strongest in more than 75 years.
El Niño can create significant weather disruptions across coffee-growing regions, including periods of excessive rainfall, drought and temperature fluctuations.
For Brazil, the immediate concern is whether the weather pattern could delay rainfall during September and October, when flowering normally occurs.
Commercial, a coffee trader, has warned that delayed rainfall during this period could negatively affect Brazil’s 2026/27 crop.
This creates a major uncertainty for the market.
Current rainfall is favourable, but weather patterns can change rapidly. A deterioration during the flowering period could challenge the USDA’s record production forecast.
Bullish Sentiment
1. Arabica inventories remain historically low
ICE arabica stocks recently fell to just 217,646 bags, the lowest level in 27 years.
2. El Niño creates significant production risk
A strong El Niño could produce disruptive weather conditions across Brazil, Vietnam and other major coffee-growing regions.
3. Brazil’s flowering period is critical
Any significant delay in rainfall during September and October could damage flowering and reduce the potential for the 2026/27 crop.
4. Weather conditions remain a major uncertainty
The market is increasingly dependent on whether current favourable Brazilian and Vietnamese conditions persist through the full production cycle.
5. Arabica and robusta fundamentals are diverging
Extremely low arabica inventories could provide support even while robusta faces increasing supply pressure.
6. Future crop forecasts remain weather-dependent
The USDA’s record production forecasts assume favourable growing conditions, leaving prices exposed if weather deteriorates.
Bearish Sentiment
1. Global coffee production is reaching record levels
The ICO expects 2025/26 production to reach 183.6 million bags, up 4.4% year over year.
2. The global market has moved into surplus
The ICO estimates a 3 million-bag surplus for 2025/26, marking the first surplus in five years.
3. USDA expects another record crop
Global 2026/27 production is forecast at 189.7 million bags, up 6%.
4. Brazil’s next crop is expected to be exceptionally large
The USDA forecasts Brazil’s 2026/27 crop at 71.9 million bags, up 14%.
5. Brazilian exports are surging
August exports reached a record 4.155 million bags, up 31% year over year.
6. Vietnam production is improving
Vietnam’s 2025/26 crop is expected to rise 6% to approximately 29.4 million bags.
7. Robusta inventories are increasing
ICE robusta stocks have reached a 9.75-month high of 5,088 lots.
8. Global ending stocks are expected to rise
The USDA expects world coffee ending stocks to increase by 1.9 million bags to 26.3 million bags.
Coffee Price Forecast: What Traders Are Watching
The coffee market is currently being driven by a powerful supply narrative.
The immediate evidence points toward increased availability from Brazil and Vietnam, while the ICO and USDA are both forecasting substantial global production.
The main counterweight is weather.
The market has already seen how quickly coffee prices can react when crop risks emerge. Historically low arabica inventories provide another layer of support, particularly if physical supply becomes tighter.
However, the current direction will depend heavily on whether favourable weather persists long enough to validate the large 2026/27 production forecasts.
If Brazilian flowering progresses successfully and Vietnam continues to receive beneficial rainfall, the bearish supply narrative could remain dominant.
If El Niño produces a significant disruption during the critical flowering period, traders may rapidly reassess the record-crop assumptions.
Supply Outlook
The supply outlook is currently expanding.
Brazil is bringing its current crop into export channels, Vietnam is reporting stronger exports and production, and both major organisations and the USDA expect global production to reach record or near-record levels.
The USDA’s forecast for 189.7 million bags in 2026/27 represents a substantial increase from the current season.
The major risk to this outlook is weather.
Brazil’s September-October flowering period is particularly important, and any deterioration in rainfall could quickly alter production expectations.
Demand Outlook
Demand is currently less supportive than it has been during previous periods of tightness.
The ICO expects 2025/26 global consumption to decline 0.9% to 180.6 million bags, even as production rises to a record level.
This combination is responsible for the projected 3 million-bag surplus.
For prices to establish a stronger recovery, demand would need to improve while supply expectations become less abundant.
The market will therefore continue to watch global consumption trends alongside production estimates and inventories.
Market Outlook for the Coming Sessions
For the coming sessions, coffee prices are likely to remain sensitive to Brazilian rainfall, flowering progress, Vietnam’s crop conditions, ICE inventories, export data and global production forecasts.
The current trend remains dominated by increasing supply.
Brazil’s record August exports and favourable rainfall are particularly important for arabica, while Vietnam’s strong exports and rising robusta inventories are creating additional pressure on the robusta market.
The next major catalyst is likely to be fresh evidence regarding Brazil’s 2026/27 flowering conditions.
A continuation of favourable weather could reinforce expectations for another large crop. Conversely, delayed rainfall or adverse El Niño conditions could quickly return weather risk to the centre of the market.
Currency Hedger View
Currency Hedger views the coffee market through both the commodity-price and foreign-exchange channels.
Brazil is particularly important because the Brazilian real influences the local-currency economics of coffee exports. Changes in USD/BRL can therefore affect producer selling incentives even when international coffee futures remain unchanged.
For coffee importers, roasters and international traders, movements in the US dollar can also materially change the effective cost of physical coffee.
With global coffee supplies expanding while currency markets remain sensitive to interest rates, commodities and geopolitical developments, businesses with significant coffee exposure may need to consider both coffee-price risk and FX risk when planning future purchases.
Analysis Louis Roche Today Markets
Coffee is currently facing a major supply-driven correction, with both arabica and robusta prices under pressure as the global production outlook improves.
The bearish case is being supported by several developments occurring simultaneously: the ICO is forecasting a 3 million-bag global surplus for 2025/26, the USDA expects record global production in 2026/27, Brazil is reporting exceptionally strong exports and rainfall is currently supporting the next Brazilian crop.
Vietnam is also adding to supply, with stronger exports, improving soil moisture and production expected to reach a four-year high.
However, the market is not without significant upside risks.
Arabica inventories remain historically low, and the potential impact of El Niño cannot be ignored. Brazil’s September and October flowering period is particularly important, meaning the current record-production forecasts remain dependent on continued favourable weather.
The immediate coffee market is therefore being pulled between abundant supply expectations and historically tight arabica inventories, with weather representing the major variable capable of changing that balance.
For the coming sessions, Brazilian flowering conditions, rainfall, Vietnam’s crop development and ICE inventory trends should remain the primary indicators for determining whether the current three-month decline extends further or begins to stabilise.
Louis Roche – Today Markets
