Coffee Prices Attempt Recovery After Two-Week Sell-Off as Brazilian Supply and Rising Inventories Weigh on Market

Today Markets Analysis

Coffee futures recovered modestly on Friday, with both arabica and robusta contracts closing higher after recent selling pressure pushed New York arabica to a one-month low. December ICE New York arabica coffee gained 1.75 points, or 0.61%, while January ICE London robusta advanced 28 points, or 0.88%.

Despite Friday’s recovery, the broader market remains under pressure. December New York arabica fell 6.6% over the week as concerns intensified that Brazilian exporters could increase sales following an 8.6% weekly decline in the Brazilian real.

Rising exchange inventories are adding to the bearish outlook, with Brazilian coffee awaiting grading at ICE warehouses reaching a six-week high. At the same time, improved rainfall across Brazil and Vietnam is supporting expectations for the next harvest, although the developing El Niño weather pattern creates uncertainty around future production.

The market is therefore balancing the prospect of larger near-term supplies against potential weather-related production risks further ahead. Monday’s opening will be important in determining whether Friday’s modest rebound can develop into a broader recovery or whether the recent downward trend resumes.

Market Snapshot

Current Coffee Price Action

New York arabica coffee recovered modestly on Friday, gaining 1.75 points, or 0.61%, after reaching a one-month low during the previous session. London robusta also moved higher, advancing 28 points, or 0.88%.

However, Friday’s gains represent only a limited recovery following a substantial two-week sell-off. December New York arabica declined 6.6% over the week, reflecting concerns about Brazilian export availability and the growing volume of coffee arriving at exchange warehouses.

The weaker Brazilian real remains a central influence. Its 8.6% weekly decline increases the local-currency returns available to Brazilian exporters selling coffee internationally, potentially encouraging additional supply into the export market.

Brazil is the world’s largest coffee producer and exporter, accounting for approximately 35–40% of global production and nearly 30% of world coffee exports. Consequently, changes in Brazilian currency conditions can have a substantial influence on international coffee pricing.

Brazil: Currency Weakness Encourages Export Selling

The sharp depreciation of the Brazilian real has become one of the strongest immediate bearish influences on coffee futures.

A weaker real makes dollar-denominated coffee sales more attractive to Brazilian exporters because the same dollar revenue converts into a greater amount of local currency.

This can encourage producers and exporters to increase sales, adding to international supply availability even when global inventories remain relatively tight.

Brazil’s September coffee exports increased by more than 20% year-on-year to 236,000 tonnes, according to the country’s Trade Ministry.

The country’s 2026 production outlook has also been revised higher. Conab raised its estimate to 67.6 million bags from 66.7 million bags.

The breakdown highlights an important difference between the two main coffee varieties:

• Arabica production is forecast to increase 34.8% year-on-year to 48.21 million bags.
• Robusta production is expected to decline 6.6% to 19.39 million bags.

The significant increase in arabica production is particularly relevant to New York futures, while the projected decline in Brazilian robusta output provides a different supply picture for the London market.

ICE Inventories: Brazilian Coffee Arrivals Increase

Exchange inventory developments are adding further pressure to coffee prices.

ICE reported that 47,476 bags of Brazilian coffee were awaiting grading at its warehouses on Friday, the highest level in six weeks.

Coffee must pass the relevant grading process before being included in certified exchange inventory figures. This process can take one to two weeks, or longer when volumes are high.

The rapid arrival of Brazilian coffee since mid-September has already increased ICE inventories of Brazilian coffee to 83,052 bags on Thursday and Friday, a nine-month high.

ICE arabica inventories also increased by 3,033 bags to 225,068 bags on Thursday and Friday, compared with 222,035 bags on Wednesday.

Despite the increase, certified arabica stocks remain relatively low historically. The latest figure is only modestly above the 27-year low of 217,646 bags recorded on September 15.

Robusta inventories have increased more sharply since early October. ICE stocks reached a 1.25-year high of 6,809 lots on Thursday before easing slightly to 6,763 lots on Friday.

The distinction between coffee awaiting grading and certified exchange stocks remains important. Additional Brazilian arrivals could eventually increase certified inventories if the beans pass grading, potentially creating further pressure on prices.

Brazil Weather: Rainfall Supports the Next Arabica Crop

Improving rainfall conditions across Brazil are another bearish consideration for coffee.

Somar Meteorologia reported that Minas Gerais received 29.6 millimetres of rain during the week ended October 25, equivalent to 82% of the historical average.

Minas Gerais is Brazil’s principal arabica-producing region, and rainfall is particularly important during the flowering stage of the coffee crop.

Above-normal rainfall during this critical period could support flowering and improve the development prospects for the 2026/27 harvest.

The improved production outlook, combined with Conab’s upward revision to Brazil’s 2026 crop estimate, is helping reinforce expectations for greater arabica availability.

Vietnam: Improved Rainfall Supports Robusta Production

Vietnam’s weather conditions are also providing support for the next coffee crop.

Forecaster Vaisala reported that recent abundant rainfall has improved soil moisture levels across Vietnam’s Central Highlands, the country’s largest coffee-producing region.

The improved moisture conditions should support coffee cherry development, potentially improving the outlook for the next harvest.

Vietnam’s 2025/26 coffee production is projected to increase by 6% year-on-year to 1.76 million tonnes, equivalent to approximately 29.4 million bags. This would represent a four-year high.

Export figures have also been strong. Vietnam’s September coffee exports increased 53% year-on-year to 124,000 tonnes, while January–September exports rose 16.2% to 1.45 million tonnes.

Vietnam’s full-year 2025 coffee exports increased 17.5% to 1.58 million tonnes.

The combination of stronger exports and improved growing conditions is a significant bearish factor for robusta prices, particularly while exchange inventories are also increasing.

El Niño: Future Weather Risks Could Reverse the Supply Outlook

Despite favourable current growing conditions, the developing Super-El Niño remains an important longer-term risk for coffee production.

The potential weather pattern could disrupt rainfall across Brazil and Vietnam, affecting two of the world’s most important coffee-producing countries.

Vietnam’s Agriculture Ministry warned on October 16 that the Central Highlands could face an El Niño-related drought later this year and into early 2027.

This creates uncertainty around the current improvement in soil moisture and crop development.

For Brazil, the timing of rainfall during flowering and subsequent crop development will be particularly important. If weather conditions deteriorate, the market could begin to reassess expectations for the next arabica harvest.

The possibility of weather disruption is therefore providing underlying support, even as the immediate supply picture remains relatively comfortable.

Colombia: Lower Production Adds an Arabica Supply Concern

Colombia’s latest production and export figures provide a more supportive element for arabica prices.

The Colombian Coffee Federation reported that 2025/26 coffee production fell 15% year-on-year to 12.65 million bags.

Coffee exports also declined by 12% to 11.78 million bags.

Colombia is the world’s second-largest arabica producer, making its production performance relevant to the international arabica market.

The decline contrasts with Brazil’s sharply higher arabica production forecast, illustrating the different supply conditions across major producing origins.

Global Coffee Balance: Record Production and Surplus Forecast

The International Coffee Organization’s 2025/26 outlook remains a significant bearish influence.

The ICO projected that global coffee production would increase 4.4% year-on-year to a record 183.6 million bags.

Consumption was forecast to decline 0.9% to 180.6 million bags, leaving the global market with an estimated surplus of 3 million bags.

This would represent the first global coffee surplus in five years.

The USDA’s 2026/27 outlook is also bearish, with global production forecast to increase 6% to a record 189.7 million bags, an increase of 10.8 million bags.

The USDA expects:

• Global arabica production to increase 12% year-on-year.
• Global robusta production to decline 0.7%.
• World ending stocks to rise by 1.9 million bags to 26.3 million bags.

The USDA’s Foreign Agricultural Service separately forecast a record Brazilian coffee crop of 71.9 million bags for 2026/27, up 14% year-on-year.

These projections point towards a potentially more comfortable global supply position, although the eventual balance will depend on weather conditions, export performance and consumption.

Bullish Sentiment

1. Arabica inventories remain historically low: ICE certified arabica stocks of 225,068 bags remain only modestly above the 27-year low recorded in September.
2. Brazilian coffee awaiting grading: The 47,476 bags awaiting ICE grading could delay the appearance of additional supply in certified inventory figures.
3. El Niño weather risk: Potential drought and rainfall disruption across Brazil and Vietnam could affect future production.
4. Colombian production declines: Colombia’s 2025/26 output fell 15% to 12.65 million bags, reducing supply from an important arabica-producing origin.
5. Brazilian robusta production forecast lower: Conab expects Brazilian robusta output to decline 6.6% to 19.39 million bags.
6. Friday’s price recovery: Both arabica and robusta futures finished higher, offering an initial sign of stabilisation after recent selling pressure.

Bearish Sentiment

1. Brazilian real weakens 8.6%: Currency depreciation increases the incentive for Brazilian exporters to sell coffee internationally.
2. Brazilian production forecast increases: Conab raised its 2026 production estimate to 67.6 million bags, including a 34.8% increase in arabica output.
3. ICE Brazilian coffee inventories rise: Brazilian coffee stocks reached 83,052 bags, a nine-month high.
4. Arabica coffee awaiting grading increases: The 47,476 bags awaiting grading represent the highest level in six weeks and could add to certified stocks.
5. Vietnamese exports increase: September exports rose 53% year-on-year, while January–September shipments increased 16.2%.
6. Improved growing conditions: Rainfall in Brazil and Vietnam is supporting expectations for the next crop.
7. Global surplus forecast: The ICO estimates a 3-million-bag surplus for 2025/26, while the USDA expects global production to reach a new record in 2026/27.

Monday Coffee Market Outlook: What Traders Should Watch at the Open

Monday’s opening session will test whether Friday’s modest recovery can develop into a more meaningful correction or whether the market resumes its two-week decline.

The immediate bearish influence remains the Brazilian real. After losing 8.6% over the week, continued weakness could encourage exporters to increase sales, particularly with Brazil’s 2026 arabica crop forecast substantially higher.

ICE inventory developments will also remain important. The increase in Brazilian coffee awaiting grading, combined with rising robusta stocks, creates the possibility of further inventory pressure as additional coffee enters the certified warehouse system.

Bearish scenario for Monday: If the Brazilian real remains weak and traders continue to focus on larger Brazilian and Vietnamese supplies, Friday’s recovery may prove short-lived. Further attention on rising ICE inventories and the prospect of a global coffee surplus could encourage renewed selling.

Bullish scenario for Monday: If traders focus on historically low certified arabica inventories, Colombia’s declining production and the longer-term threat from El Niño, coffee could extend Friday’s recovery. A stabilisation in the Brazilian real would also reduce some of the immediate incentive for increased exporter selling.

Arabica and robusta may continue to respond differently to their respective supply outlooks. Brazil’s higher arabica production forecast is a significant pressure point for New York, while the reduction in Brazilian robusta output provides a contrasting supply consideration for London.

The key question for Monday is whether the market continues to price in greater near-term availability or begins to place more weight on historically low arabica stocks and future weather risks.

Price Forecast: What Traders Are Watching

Coffee’s near-term outlook remains cautious, with the recent weekly decline reflecting a combination of currency pressure, rising inventories and expectations for larger production.

The Brazilian real will remain a major influence. Further depreciation could encourage additional export selling, while a recovery in the currency may reduce the incentive for producers and exporters to accelerate sales.

ICE inventory movements will also be closely monitored. The number of Brazilian bags awaiting grading could provide an early indication of how much additional coffee may enter certified stocks over the coming weeks.

Weather will become increasingly important as the market assesses the next production cycle. Favourable rainfall in Brazil and Vietnam currently supports the supply outlook, but the potential for El Niño-related drought introduces a significant element of uncertainty.

The next major directional signal is likely to come from the interaction between Brazilian export availability, exchange inventories and crop development.

A sustained recovery will require more than a single positive session. Traders will need to see evidence that selling pressure is easing and that the market is beginning to place greater value on the risks to future production.

Market Outlook for the Coming Sessions

Coffee enters the new trading week following a modest Friday recovery, but the broader market remains under pressure.

Brazil’s higher production outlook, stronger export activity, currency weakness and increasing ICE inventories continue to favour sellers in the near term.

However, historically low certified arabica stocks, declining Colombian production and the potential impact of El Niño provide reasons to remain cautious about the longer-term supply outlook.

The market is likely to remain volatile as traders balance the prospect of greater immediate availability against the risk of weather-related disruption to the next harvest.

For Monday, the short-term bias remains cautious, with the sustainability of Friday’s recovery dependent on currency movements and inventory developments. A further deterioration in the Brazilian real could renew selling pressure, while stabilisation in exchange stocks and renewed weather concerns could help prices recover.

Currency Hedger View

Coffee demonstrates how foreign-exchange movements can directly influence the international supply of agricultural commodities.

The 8.6% decline in the Brazilian real has increased the incentive for Brazilian exporters to sell coffee in dollar-denominated markets. For international buyers, however, commodity prices are only one component of the final purchasing cost.

Coffee importers, roasters, distributors and manufacturers may also face currency exposure when purchasing supplies from Brazil, Vietnam, Colombia and other producing countries.

Changes in exchange rates can alter procurement costs, supplier payments and expected margins, even when the underlying coffee price remains unchanged.

Currency Hedger encourages businesses with international coffee supply chains to assess commodity exposure and foreign-exchange risk together when planning procurement, payment schedules and commercial pricing.

Explore Currency Hedger or open an account to discuss your commodity and currency exposure.

Disclaimer: This market analysis is provided for informational purposes only and does not constitute investment advice, financial advice or a recommendation to buy or sell any financial instrument or commodity. Futures and derivatives trading involves significant risk and may not be suitable for all investors. Market prices and forecasts can change without notice. Always conduct independent research and seek professional advice where appropriate.

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