Supply Risks Support Coffee Prices

December arabica coffee (KCZ26) is up +11.55 (+3.78%) today, and November ICE robusta coffee (RMX26) is up +64 (+1.87%).

Coffee prices are moving sharply higher today, with arabica posting a 6-week high. Concerns that an El Niño weather pattern could hurt Brazil's and Vietnam’s coffee crops next year are underpinning coffee prices.  Last Friday, Vietnam’s Agriculture Ministry said that Vietnam’s Central Highlands, the country’s largest coffee-growing region, could face an El Niño-triggered drought later this year and early 2027.

On July 8, the US Climate Prediction Center said the El Niño weather pattern that emerged across the equatorial Pacific last month will likely be one of the strongest in more than 75 years.  This sets the stage for months of possible floods, droughts, and temperature fluctuations later this year that could hinder coffee production in Asia and South America. 

Gains in robusta coffee are limited today after ICE robusta coffee inventories climbed to an 11.5-month high.

On October 9, Colombia’s Coffee Federation reported that 2025/26 Colombia coffee production (Oct-Sep) fell -15% y/y to 12.65 million bags, and Colombia’s 2025/26 coffee exports fell -12% y/y to 11.78 million bags.  Colombia is the world’s second-largest arabica producer. 

Beneficial growing conditions in Brazil and Vietnam are negative for coffee prices.  Above-normal rainfall in Brazil during the now critical flowering stage may benefit next year’s 2026/27 coffee harvest, a bearish factor for prices.  Somar Meteorologia reported today that 48.6 mm of rain, or 148% of the historical average, fell in Brazil's Minas Gerais, the country's main arabica-coffee growing region, in the week ended October 18.  In Vietnam, forecaster Vaisala said recent abundant rains have improved soil moisture levels and should aid cherry development in Vietnam’s Central Highlands, the country’s largest coffee-producing region. 

Larger coffee supplies from Brazil are bearish for prices.  On October 6, Brazil’s Trade Ministry reported that Brazil’s Sep coffee exports jumped more than +20% y/y to 236,000 MT.

Last month, coffee prices were under pressure and posted 4-month lows on September 23 as the outlook for abundant global supplies emerged.  On September 10, the International Coffee Organization (ICO) projected a record global coffee crop and a surplus.  ICO said 2025/26 global coffee production rose +4.4% y/y to a record 183.6 million bags and consumption fell -0.9% y/y to 180.6 million bags, leaving the global coffee market in a 3 million bag surplus, the first surplus in five years.

On September 24, Conab, Brazil’s crop forecasting agency, raised its Brazil 2026 coffee production estimate to 67.6 million bags from a previous estimate of 66.7 million bags. Brazil’s 2026 arabica coffee production is expected to climb by +34.8% y/y to 48.21 million bags, while robusta production is expected to fall -6.6% y/y to 19.39 million bags. 

Signs of bigger coffee supplies from Vietnam, the world’s largest producer of robusta coffee, are undercutting robusta coffee prices.  Vietnam's National Statistics Office reported on October 2 that Vietnam's Sep coffee exports rose +53% y/y to 124,000 MT and 2026 coffee exports (Jan-Sep) rose by +16.2% y/y to 1.45 MMT.  Vietnam's 2025 coffee exports jumped by +17.5% y/y to 1.58 MMT.  Also, Vietnam's 2025/26 coffee production is projected to climb +6% y/y to a 4-year high of 1.76 MMT (29.4 million bags).

Falling inventories are bullish for arabica coffee prices, as ICE arabica coffee inventories fell to a 27-year low of 217,646 bags on September 15, although they rebounded to a 2.25-month high of 260,654 bags on September 30.  By contrast, rising inventories are bearish for robusta coffee as ICE robusta inventories climbed to an 11.5-month high of 5,964 lots today.

The latest USDA biannual forecast was bearish for coffee prices.  On July 22, the USDA forecast that global coffee output in the 2026-27 season will rise by +6.0% (10.8 million bags) to a record 189.7 million bags, mainly due to improved growing conditions in Brazil.  The USDA expects global arabica production to rise +12% y/y, although robusta production is expected to fall by -0.7% y/y.  World ending stocks are expected to rise +1.9 million bags to 26.3 million bags.  On June 3, the USDA's Foreign Agricultural Service (FAS) forecast a record 2026/27 Brazil coffee crop of 71.9 million bags, up +14% y/y.

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.