Coffee Prices Diverge as Brazilian Supply Weighs on Arabica and Indian Crop Cuts Support Robusta

Arabica Falls to Five-Week Low as Export Growth and Rising Production Forecasts Pressure the Market

Coffee futures delivered a mixed performance on Thursday, with New York arabica extending its decline to a five-week low while London robusta managed a modest gain. December ICE arabica fell 2.60 points, or 0.93%, while January ICE robusta advanced 13 points, or 0.40%.

The divergence reflects different supply dynamics across the two markets. Expectations of increased Brazilian exports, rising warehouse arrivals and forecasts for a record global coffee crop are weighing on arabica. Robusta, meanwhile, is receiving some support from India’s downward revision to its 2026/27 production estimate.

However, the wider coffee market remains under pressure from the prospect of stronger global supplies. Brazil’s production outlook has improved, Vietnamese exports have increased sharply and the International Coffee Organization (ICO) has projected a global surplus. Tight arabica inventories and the possibility of El Niño-related weather disruption are providing some counterbalance.

Market Snapshot

Arabica Falls to Five-Week Low as Brazilian Supply Expectations Increase

December ICE arabica declined 0.93% on Thursday, extending recent weakness as traders assessed the prospect of increased Brazilian coffee exports.

ICE reported that 55,396 bags of Brazilian coffee were awaiting grading at its warehouses as of Tuesday, the highest level in seven weeks.

Coffee must pass grading requirements before being included in certified warehouse inventory figures. The process can take one to two weeks, or longer when volumes are high.

Brazilian coffee has been arriving rapidly at ICE warehouses since mid-September. Inventories of Brazilian coffee subsequently climbed to 83,678 bags on Thursday, a 9.25-month high.

The increase in arrivals is raising expectations that additional coffee could become available for delivery through the exchange system, adding pressure to arabica prices.

The distinction between coffee awaiting grading and certified inventory remains important. The latest arrivals have not yet translated into a comparable increase in certified arabica stocks.

Brazilian Real Weakness Encourages Export Selling

Currency movements are adding to the bearish supply outlook.

The Brazilian real fell to a 10.25-month low against the US dollar following President Luiz Inácio Lula da Silva’s surprise election victory.

A weaker real increases the local-currency value of dollar-denominated coffee export receipts, encouraging Brazilian exporters to sell more coffee internationally.

Brazil dominates global coffee production and trade, accounting for approximately 35–40% of world production and nearly 30% of global exports, according to the ICO and USDA.

This means changes in Brazilian export behaviour can have a significant influence on international coffee prices.

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

If the real remains weak and export activity continues to expand, additional Brazilian supplies could keep pressure on arabica futures.

Brazil’s 2026 Coffee Crop Forecast Revised Higher

Brazil’s crop outlook is another important bearish factor.

Conab, the country’s crop forecasting agency, raised its 2026 coffee production estimate on September 24 to 67.6 million bags from 66.7 million bags.

The revised forecast includes:

The expected increase in arabica production is particularly significant given Brazil’s dominant position in the market.

Above-normal rainfall during the flowering stage could also support the next harvest. Somar Meteorologia reported that Brazil’s Minas Gerais region received 29.6 mm of rainfall during the week ending October 25, equivalent to 82% of its historical average.

Favourable growing conditions could improve crop development and reinforce expectations of greater availability in the 2026/27 season.

However, the potential impact of El Niño remains a significant uncertainty for the next crop cycle.

Robusta Receives Support From India’s Production Downgrade

While arabica declined, January ICE robusta advanced 0.40% as the market responded to a reduction in India’s coffee production forecast.

India’s Coffee Board lowered its 2026/27 production estimate to 380,000 MT from 400,000 MT, a reduction of 5%.

The revision was attributed to below-normal monsoon rainfall.

India is the world’s fifth-largest robusta coffee producer, making the production downgrade relevant to the international supply outlook.

The reduction provides some support for robusta prices, particularly as the market assesses the availability of supplies from other major producers.

However, the positive impact is being offset by strong export activity from Vietnam, the world’s largest robusta producer.

Vietnam Coffee Exports Surge 61% in October

Vietnam’s latest export figures are adding significant pressure to the robusta market.

The National Statistics Office reported that October coffee exports increased 61% year over year to 114,000 MT.

Total exports between January and October reached 1.57 MMT, up 18.8% compared with the same period last year.

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

Production is also expected to improve. Vietnam’s 2025/26 coffee crop is projected to increase 6% year over year to 1.76 MMT, equivalent to approximately 29.4 million bags.

The combination of higher exports and improving production provides a substantial source of available robusta supply.

This helps explain why the market’s response to India’s lower production forecast has been relatively limited.

ICE Coffee Inventories Present a Mixed Supply Picture

Exchange inventories are providing contrasting signals for arabica and robusta.

ICE arabica stocks fell to a seven-week low of 220,379 bags on Tuesday, only modestly above the 27-year low of 217,646 bags recorded on September 15.

The low certified stock level could limit additional downside in arabica prices, particularly if incoming Brazilian coffee takes longer to pass grading requirements.

However, Brazilian arrivals are increasing, and the market will be watching whether these volumes begin to replenish certified inventories.

Robusta inventories have moved in the opposite direction. ICE robusta stocks increased sharply from early October, reaching a 1.25-year high of 6,809 lots last Thursday before easing to 6,721 lots on Thursday.

The increase in robusta stocks reinforces the pressure created by higher Vietnamese exports.

El Niño Creates Longer-Term Weather Uncertainty

Despite the improving production outlook in Brazil and Vietnam, weather risks remain an important source of potential price support.

The developing super-El Niño pattern could affect rainfall across major coffee-producing regions, particularly Brazil and Vietnam.

Vietnam’s Agriculture Ministry warned that the Central Highlands, the country’s largest coffee-growing region, could face an El Niño-related drought later this year and in early 2027.

The region is particularly important for robusta production.

In Brazil, El Niño could also disrupt weather conditions during critical stages of crop development. While recent rainfall has supported flowering and soil moisture, a shift towards warmer and drier conditions could affect subsequent yields.

The weather outlook therefore introduces uncertainty into forecasts that currently anticipate stronger global production.

Colombia Production Declines Add to Arabica Supply Concerns

Colombia’s latest production and export figures provide another supportive factor for arabica.

The Colombian Coffee Federation reported that production during the 2025/26 season, covering October to September, fell 15% year over year to 12.65 million bags.

Coffee exports declined 12% to 11.78 million bags.

Colombia is the world’s second-largest arabica producer, meaning lower output from the country could tighten availability in the international arabica market.

However, the impact is currently being offset by expectations of significantly higher Brazilian production.

Global Coffee Market Faces Record Production and Surplus

The broader global balance remains a major bearish influence.

The International Coffee Organization projected a record global coffee crop for 2025/26, with production increasing 4.4% year over year to 183.6 million bags.

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

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

The USDA’s outlook for 2026/27 is also bearish.

Its July forecast projected global coffee production would increase 6% to a record 189.7 million bags, an annual increase of 10.8 million bags.

The USDA expects global arabica production to rise 12%, while robusta production is projected to decline by 0.7%.

World ending stocks are forecast to increase by 1.9 million bags to 26.3 million bags.

The USDA’s Foreign Agricultural Service also projected a record Brazilian crop of 71.9 million bags in 2026/27, up 14% year over year.

These estimates suggest that global supply could improve substantially, although the final outcome will depend on weather conditions and actual harvest performance.

Bullish Sentiment

1. Low arabica inventories: ICE arabica stocks remain close to their 27-year low, potentially limiting further downside.
2. Indian production downgrade: India’s 2026/27 coffee production estimate has been reduced by 5% to 380,000 MT.
3. Colombian production weakness: Output fell 15% year over year to 12.65 million bags.
4. El Niño risk: Potential drought conditions in Vietnam and adverse weather in Brazil could reduce future production.
5. Brazilian robusta decline: Conab expects Brazilian robusta production to fall 6.6% in 2026.
6. Grading delays: Brazilian coffee awaiting ICE grading has not yet entered certified inventory figures in significant volumes.

Bearish Sentiment

1. Higher Brazilian supply: Brazil’s 2026 production estimate has increased to 67.6 million bags.
2. Arabica production recovery: Brazilian arabica output is forecast to increase 34.8% to 48.21 million bags.
3. Weaker Brazilian real: Currency depreciation encourages exporters to increase dollar-denominated coffee sales.
4. Vietnamese export growth: October exports increased 61% year over year to 114,000 MT.
5. Higher Vietnamese production: The 2025/26 crop is projected to rise 6% to 1.76 MMT.
6. Global surplus: The ICO expects a 3 million bag surplus for 2025/26.
7. Record production forecasts: The USDA projects global production of 189.7 million bags in 2026/27.
8. Rising robusta stocks: ICE robusta inventories remain substantially above early October levels.

Coffee Price Forecast: What Traders Are Watching

The coffee market is likely to remain divided between arabica and robusta, with different supply conditions influencing each contract.

Arabica Outlook

Arabica remains vulnerable to increased Brazilian export availability and the prospect of a much larger Brazilian harvest.

The rise in coffee awaiting ICE grading suggests that certified inventories could increase if incoming supplies pass inspection. This could add further pressure to prices, particularly while global production forecasts remain elevated.

However, certified arabica stocks are still close to historic lows. Any slowdown in Brazilian arrivals or deterioration in crop conditions could provide support.

Robusta Outlook

Robusta is receiving some support from India’s lower production estimate, but the market faces significant pressure from Vietnam’s export growth.

Higher Vietnamese shipments, rising production forecasts and increased ICE robusta inventories create a challenging supply environment.

The key question is whether India’s production reduction and potential El Niño disruption can offset the additional availability from Vietnam.

Key Indicators to Monitor

• Brazilian coffee arrivals and ICE grading volumes.
• Changes in certified arabica and robusta inventories.
• Brazilian real movements and export competitiveness.
• Vietnam’s export performance and production outlook.
• India’s revised 2026/27 production estimate.
• El Niño developments across Brazil and Vietnam.
• Updated global production and ending-stock forecasts.

Supply Outlook

Global coffee supply is expected to improve, primarily because of stronger production forecasts in Brazil and Vietnam.

Brazil’s higher arabica production estimate and increasing warehouse arrivals are creating immediate pressure on the market. Vietnam’s strong export performance is adding further availability, particularly for robusta.

However, lower production forecasts in India and Colombia provide some counterbalance, while potential El Niño disruption could affect the next crop cycle.

The main uncertainty is whether the projected increase in Brazilian and Vietnamese production will be sufficient to offset weather-related losses elsewhere.

Demand Outlook

The demand outlook is currently being challenged by the prospect of a global surplus.

The ICO’s forecast of lower consumption and record production suggests that supply could exceed demand during the 2025/26 season.

However, the impact of future production increases will depend on actual consumption, inventory accumulation and the availability of exportable supplies.

The market will also need to assess whether lower prices encourage renewed buying from importers and roasters.

Market Outlook for the Coming Sessions

Coffee prices remain under pressure from expectations of increased global supply, with arabica particularly exposed to rising Brazilian arrivals and the prospect of a larger harvest.

Robusta has received limited support from India’s production downgrade, but strong Vietnamese exports and rising exchange inventories remain significant bearish influences.

Tight arabica stocks could prevent a deeper decline in the near term, while the developing El Niño pattern provides a longer-term source of uncertainty.

For now, the balance of evidence favours caution. The market will need to see stronger signs of supply disruption or improving demand before a sustained recovery can be established.

Today Markets Analysis

The latest coffee session highlights the growing divergence between arabica and robusta fundamentals.

Arabica is under pressure from Brazil’s improving production outlook, rising warehouse arrivals and the possibility of increased exporter selling as the real weakens. However, certified arabica inventories remain close to historic lows, providing an important potential buffer against further declines.

Robusta faces a different challenge. India’s production downgrade offers support, but Vietnam’s 61% increase in October exports and the expected rise in its 2025/26 crop are weighing on the wider market.

The global outlook is also becoming increasingly bearish, with the ICO forecasting a surplus for 2025/26 and the USDA projecting record production in 2026/27.

The main risk to this outlook is weather. A strong El Niño could disrupt production in Brazil and Vietnam, potentially reversing some of the expected supply growth.

Until those risks become visible in actual crop and export data, coffee prices are likely to remain sensitive to Brazilian supply, Vietnamese shipments and exchange inventory movements.

Currency Hedger View

Coffee is traded internationally in US dollars, making exchange-rate movements an important consideration for roasters, importers, distributors and food manufacturers.

The Brazilian real is particularly influential because Brazil is the world’s largest coffee producer and exporter. A weaker real can encourage exporters to sell more coffee internationally, potentially increasing available supply and putting pressure on global prices.

For businesses purchasing coffee in US dollars, a stronger dollar can increase the local-currency cost of imports even when international coffee prices are declining. Conversely, a weaker dollar can reduce the cost of dollar-denominated purchases for businesses paying in other currencies.

Companies exposed to both commodity prices and foreign-exchange movements should consider the combined impact on procurement costs, supplier payments and operating margins.

Currency Hedger helps businesses manage deliverable foreign-exchange exposure, arrange international payments and assess suitable currency-risk management strategies.

Manage your currency exposure:

• Open a Currency Hedger account
• Visit Currency Hedger

Disclaimer

This article is provided for general market information and educational purposes only. It does not constitute investment advice, financial advice, a recommendation or an offer to buy or sell any financial instrument. Commodity prices, production estimates and market conditions can change rapidly. Forecasts from different organisations may use different methodologies and assumptions and should not be treated as directly interchangeable. Market scenarios are conditional assessments and are not guarantees of future performance. Trading commodity futures and other financial instruments involves risk and may not be suitable for all investors. Businesses should seek appropriate professional advice when assessing their commodity and foreign-exchange exposures.

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