Today Markets Analysis
Coffee prices fell sharply on Thursday as improving growing conditions in Brazil and Vietnam reinforced expectations of abundant global supplies. December arabica futures declined 1.09% to close at a loss of 3.25 cents, while November robusta futures dropped 3.10%, reaching a two-week low.
The market is increasingly focused on the prospect of a larger 2026/27 crop, with favourable rainfall supporting production potential in Brazil and improved soil moisture aiding coffee development in Vietnam. Rising robusta inventories and stronger export volumes are adding to the pressure.
However, the outlook is not uniformly bearish. The risk of El Niño-related weather disruption, declining Colombian production and historically low arabica inventories could limit further losses if supply expectations deteriorate.
Market Snapshot
| Indicator | Latest Position |
|---|---|
| December 2026 arabica | Down 3.25 cents, or 1.09% |
| November 2026 robusta | Down 108 points, or 3.10% |
| ICE robusta inventories | 5,603 lots, a 10.75-month high |
| ICE arabica inventories | Previously reached a 27-year low of 217,646 bags |
| Brazil 2026 coffee production forecast | 67.6 million bags |
| Global 2026/27 production forecast | 189.7 million bags |
| Global 2025/26 production estimate | 183.6 million bags |
| Global 2025/26 surplus estimate | 3 million bags |
Supply Outlook: Brazil and Vietnam Increase Bearish Pressure
Brazil remains the central influence on the arabica market. Above-normal rainfall during the critical flowering period could improve prospects for the 2026/27 harvest, easing concerns about future availability.
Somar Meteorologia reported 33.3 millimetres of rainfall in Minas Gerais during the week ended October 4, equivalent to 104% of the historical average. Minas Gerais is Brazil’s main arabica-producing region, making rainfall and flowering conditions particularly important for the next crop.
Brazil’s crop forecasting agency, Conab, raised its 2026 production estimate to 67.6 million bags from 66.7 million. Arabica production is forecast to rise 34.8% year on year to 48.21 million bags, while robusta output is expected to fall 6.6% to 19.39 million bags.
In Vietnam, recent rainfall has improved soil moisture in the Central Highlands, supporting cherry development. Vietnam’s 2025/26 production is projected to rise 6% year on year to 1.76 million tonnes, or approximately 29.4 million bags.
If these favourable conditions persist, larger supplies from the two major producing countries could weigh on prices through the next crop cycle.
Export Growth Reinforces Supply Concerns
Brazil’s September coffee exports increased by more than 20% year on year to 236,000 tonnes, according to the supplied trade data.
Vietnam’s September exports rose 53% year on year to 124,000 tonnes, while exports for January to September increased 16.2% to 1.45 million tonnes. Vietnam’s full-year 2025 exports also increased 17.5% to 1.58 million tonnes.
These figures suggest that substantial volumes are reaching international buyers. Continued export growth could reinforce expectations of greater availability, particularly for robusta.
However, export volumes do not by themselves establish the size of future harvests. Prices will also depend on the pace of consumption, weather developments and the amount of coffee held in producing and consuming countries.
Bullish Sentiment
- El Niño weather risk: Potential delays to rainfall during Brazil’s flowering period could damage the 2026/27 crop and reverse current expectations of favourable production.
- Low arabica inventories: ICE arabica stocks previously fell to 217,646 bags, their lowest level in 27 years, leaving the market sensitive to supply disruptions.
- Falling Colombian output: Colombia’s 2025/26 production declined 15% year on year to 12.65 million bags, while exports fell 12% to 11.78 million bags.
- Weather volatility: Floods, droughts and temperature fluctuations across South America and Asia could affect yields if El Niño conditions intensify.
- Arabica-specific tightness: Even if global output increases, regional and variety-specific shortages could support arabica prices.
Bearish Sentiment
- Record global production outlook: The USDA projects 2026/27 global coffee output at 189.7 million bags, up 6% year on year.
- Projected global surplus: The International Coffee Organization estimated a 3-million-bag surplus for 2025/26, with production at 183.6 million bags and consumption at 180.6 million.
- Improving Brazilian conditions: Above-normal rainfall could support flowering and increase the next arabica crop.
- Rising robusta inventories: ICE robusta stocks climbed to 5,603 lots, their highest level in approximately 10.75 months.
- Strong exports: Increased shipments from Brazil and Vietnam are adding to the perception of abundant available supplies.
Price Forecast: What Traders Are Watching
The near-term bias remains bearish while favourable growing conditions, rising robusta inventories and strong exports reinforce expectations of greater supply.
Further losses are possible if Brazilian flowering progresses well, Vietnam’s harvest outlook improves and inventories continue to rise. However, a shift towards dry conditions in Brazil or evidence of significant crop damage could trigger a rapid recovery.
Arabica and robusta may also diverge. Arabica retains a potentially stronger supply-risk premium because of historically low exchange inventories and falling Colombian output, while robusta faces more immediate pressure from rising stocks and stronger Vietnamese exports.
The key issue is whether projected production gains become actual harvest volumes without being offset by adverse weather or stronger consumption.
Demand Outlook: A Larger Crop Needs Stronger Consumption
The International Coffee Organization’s estimate of a 3-million-bag surplus points to a market in which production has exceeded consumption. The USDA’s forecast of rising output and ending stocks reinforces that concern.
If consumption remains subdued while harvests expand, inventories could rebuild and constrain prices. Conversely, stronger demand or unexpected production losses could absorb the surplus more quickly than currently anticipated.
The market will need evidence that consumption is keeping pace with rising availability before a sustained recovery becomes more convincing.
Market Outlook for the Coming Sessions
Coffee prices remain vulnerable to further declines while the market anticipates a larger global crop. Brazil’s flowering conditions, Vietnam’s export performance and robusta inventory data will be particularly important in determining whether the current selling pressure continues.
The downside is not without limits. El Niño-related weather risks, weak Colombian output and low arabica stocks could create sharp reversals if the supply outlook deteriorates.
The central question is whether favourable weather will deliver the record harvest the market is pricing in, or whether weather disruption will undermine production before the next crop reaches the market.
Currency Hedger View
Coffee importers, roasters and international traders face a combination of commodity-price and foreign-exchange risks. Lower futures prices may reduce procurement costs, but movements in the US dollar and the buyer’s domestic currency can offset some of the benefit.
Businesses purchasing coffee in US dollars should assess their expected volumes, payment dates and exchange-rate exposure. Appropriate currency hedging can help manage the cost of future payments, although it does not eliminate coffee-price risk.
Open an account: Currency Hedger | Visit Currency Hedger
Contributor: Currency Hedger
Today Markets View
Coffee is facing a growing supply challenge as favourable weather in Brazil and Vietnam, stronger exports and rising robusta inventories weigh on prices. The global production outlook points towards greater availability, while consumption forecasts suggest the market may struggle to absorb the additional crop.
However, the bearish outlook depends on favourable growing conditions continuing. El Niño-related disruption, low arabica inventories and reduced Colombian production remain important counterweights.
The next sustained move will depend on whether crop forecasts translate into actual production and whether weather risks begin to threaten the expected surplus.
Analysis: Louis Roche – Today Markets
Disclaimer: This article is for informational and educational purposes only and does not constitute investment, trading or financial advice. Coffee futures are volatile and can respond sharply to weather, inventories, export data and changes in global demand. Forecasts are uncertain, and readers should conduct their own research before making financial decisions.
