Coffee prices are pushing higher as weather concerns in Brazil begin to challenge an otherwise bearish global supply outlook. Arabica futures have reached a three-week high while robusta has climbed to a one-month high, with dry-weather concerns during Brazil’s critical flowering period creating renewed upside risk for the 2026/27 crop.

The market remains fundamentally divided. Record global production forecasts, strong Brazilian exports and improving Vietnamese supply continue to weigh on prices, while the possibility of an El Niño-driven disruption to flowering and tightening arabica inventories are providing support.

The next major move in coffee is therefore likely to depend on whether weather concerns develop into a measurable threat to production or whether the market continues to focus on abundant global supplies.

Market Snapshot

Market Factor	Current Situation	What Traders Are Watching
Arabica	Around a three-week high	Brazilian flowering conditions and rainfall
Robusta	Around a one-month high	Vietnam production and export flows
Brazil 2026 Crop	Conab estimate raised to 67.6M bags	Final harvest volumes and export availability
Global 2025/26 Balance	3M-bag surplus projected by ICO	Whether the surplus persists
2026/27 Global Crop	USDA forecasts record 189.7M bags	Brazil’s contribution to global growth
Brazil Weather	Rainfall remains highly variable	Flowering conditions in Minas Gerais
El Niño	Weather risk remains elevated	Potential disruption to Brazil and Asian crops
Arabica Inventories	260,054 bags, after a recent 27-year low	Whether stocks begin tightening again
Robusta Inventories	5,398 lots, around a 10-month high	Continued pressure from abundant supply

Current Coffee Price Action

Arabica coffee is currently benefiting from renewed weather risk, with prices reaching a three-week high as traders reassess the prospects for Brazil’s next crop.

Robusta has also strengthened, reaching a one-month high, although its fundamental picture remains more heavily influenced by improving Vietnamese supply and elevated exchange inventories.

The recent rally follows a period of significant selling pressure. Coffee had previously fallen to multi-month lows as traders focused on expectations for abundant global production.

The market is now shifting between two competing narratives: record supply versus potential weather-driven crop risk.

Brazil Coffee Supply and Production

Brazil remains the most important variable for the global coffee market.

Conab has raised its 2026 Brazil coffee production estimate to 67.6 million bags, compared with the previous estimate of 66.7 million bags.

Within that total, arabica production is expected to increase 34.8% year-on-year to 48.21 million bags, while robusta production is forecast to decline 6.6% to 19.39 million bags.

The larger arabica crop is a major bearish factor for prices, but attention is increasingly shifting toward the next 2026/27 crop and the condition of flowering trees.

Brazil Flowering Conditions

The flowering period has become one of the most important near-term drivers for arabica.

Brazil’s Minas Gerais region is particularly important because it is the country’s largest arabica-producing area.

Recent rainfall has been relatively supportive. Somar Meteorologia reported 29.7 mm of rainfall, equivalent to 112% of the historical average, during the week ending September 27.

However, forecasts for limited rainfall over the coming week have renewed concerns that moisture conditions could become less favourable.

This creates a highly weather-sensitive market. If rainfall remains sufficient through flowering, the large-production narrative could regain control. If dryness becomes persistent, traders may begin pricing greater risk into the 2026/27 crop.

El Niño Coffee Risk

El Niño remains a significant uncertainty for the coffee market.

A stronger El Niño pattern could disrupt rainfall across important coffee-producing regions in South America and Asia, creating the potential for drought, excessive rainfall and temperature extremes.

For Brazil, the timing is particularly important because September and October rainfall can influence flowering and subsequent crop development.

The market does not necessarily need a confirmed production loss to react. A prolonged deterioration in weather expectations could be enough to generate additional speculative buying.

Global Coffee Supply Outlook

The broader supply picture remains bearish.

The International Coffee Organization estimates that 2025/26 global coffee production reached a record 183.6 million bags, up 4.4% year-on-year.

At the same time, consumption was estimated at 180.6 million bags, down 0.9% year-on-year, leaving the global market with an estimated 3 million-bag surplus.

That would represent the first global surplus in five years and provides a significant fundamental headwind for prices.

The USDA’s 2026/27 forecast is even larger, with global production expected to rise 6% to a record 189.7 million bags.

Brazil and Vietnam Export Pressure

Brazilian coffee is continuing to reach the export market as the country’s harvest progresses toward completion.

Brazil’s total coffee exports in August increased 31% year-on-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.

Vietnam is also adding supply pressure to the robusta market. Coffee exports during the first eight months of 2026 increased 13.7% year-on-year to 1.33 million metric tons.

Vietnam’s 2025/26 production is projected at 1.76 million metric tons, a four-year high.

This combination of Brazilian exports and improving Vietnamese supply makes it difficult for coffee prices to sustain a major rally without stronger evidence of crop damage.

Coffee Inventories

Inventory trends are increasingly important because the two markets are moving in different directions.

ICE arabica inventories recently fell to 217,646 bags, a 27-year low, before recovering to around 260,054 bags.

The longer-term inventory picture remains supportive for arabica, particularly if stocks begin declining again while weather concerns increase.

Robusta presents the opposite picture. ICE robusta inventories have climbed to around 5,398 lots, a ten-month high.

The divergence between falling or historically low arabica stocks and elevated robusta stocks is an important reason why the two coffee contracts may continue to behave differently.

Bullish Sentiment

1. Brazilian weather risk is increasing, particularly during the critical flowering period for the next arabica crop.
2. El Niño could disrupt rainfall patterns, creating additional uncertainty across major coffee-producing regions.
3. Arabica inventories remain historically tight, despite their recent recovery.
4. Brazilian robusta production is expected to decline, limiting part of the country’s supply growth.
5. A sustained deterioration in Brazilian weather could rapidly change expectations for the 2026/27 crop.

Bearish Sentiment

1. Global coffee production is expected to reach record levels, creating a substantial supply headwind.
2. The ICO projects a 3 million-bag global surplus for 2025/26.
3. USDA forecasts record global production of 189.7 million bags for 2026/27.
4. Brazilian exports are exceptionally strong, keeping physical coffee flowing into international markets.
5. Vietnamese exports and production are increasing, putting additional pressure on robusta.
6. Robusta inventories are near a ten-month high, reinforcing the abundant-supply narrative.

Price Forecast: What Traders Are Watching

Coffee’s next major directional move will likely depend on Brazilian weather.

If rainfall remains adequate through the flowering period, the market could increasingly price in the prospect of another large Brazilian crop. Combined with strong exports and record global production forecasts, that would create renewed downside pressure.

However, if dryness becomes persistent in Minas Gerais or El Niño produces significant disruptions, traders could begin reducing expectations for the next crop.

The most important distinction is between short-term weather risk and confirmed production damage. Coffee can rally sharply on weather concerns, but maintaining those gains will likely require evidence that crop potential is actually deteriorating.

Supply Outlook

The supply outlook remains large.

Brazil’s current crop is providing substantial export availability, while Vietnam’s improving production and exports are strengthening the robusta supply picture.

Looking further ahead, the USDA’s record global production forecast remains one of the strongest bearish fundamentals in the market.

The major threat to this outlook is weather. A significant deterioration in Brazil during flowering could reduce the projected crop and shift the market rapidly toward a tighter balance.

Demand Outlook

Demand is currently struggling to offset the expected increase in production.

The ICO’s forecast for a 0.9% decline in consumption is particularly important because a combination of rising production and softer demand creates the potential for continued inventory accumulation.

For prices to sustain a major upside move, the market will likely need either stronger consumption or a meaningful reduction in expected production.

Weather remains the most immediate mechanism capable of producing that adjustment.

Currency Hedger View

Coffee is priced internationally in U.S. dollars, making currency movements an important secondary factor for producers, roasters, importers and international traders.

A stronger dollar can increase the local-currency cost of coffee for buyers outside the United States, while currency depreciation in producing countries can influence producer selling behaviour and export competitiveness.

With coffee prices now responding to both weather expectations and global supply forecasts, businesses exposed to international coffee purchases should consider the commodity price and FX exposure together rather than treating them as separate risks.

Coming Sessions

Traders will be watching:

• Rainfall forecasts across Brazil’s Minas Gerais region.
• The development of Brazil’s 2026/27 arabica flowering cycle.
• Further evidence of El Niño’s impact on South American weather.
• Brazilian coffee export volumes.
• Vietnamese production and export flows.
• ICE arabica inventory movements.
• ICE robusta inventory levels.
• USDA and ICO revisions to global production and consumption estimates.
• Whether the recent arabica and robusta rallies can extend despite the record global supply outlook.

Today Markets View

Coffee is entering a critical period in which weather risk is beginning to challenge an exceptionally bearish global supply outlook.

Record production forecasts, strong Brazilian exports and improving Vietnamese supply remain significant obstacles for sustained price appreciation. However, the market is increasingly focused on Brazil’s flowering conditions, where a prolonged period of adverse weather could materially alter expectations for the next crop.

For now, coffee remains a market where weather expectations can move prices well before production data confirms the underlying impact.

Analysis Louis Roche – Today Markets

Currency Hedger

For coffee importers, exporters, roasters and international businesses, the cost of coffee is only part of the equation. Changes in the USD exchange rate can materially alter the final cost of international coffee transactions.

Currency Hedger provides businesses with access to international FX solutions designed to help manage currency exposure alongside their underlying commercial requirements.

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General market information and analysis provided by Octalas Group on behalf of Today Markets and Currency Hedger. This material is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any financial instrument.