Coffee Prices Buffeted by ICE Inventory Fluctuations

December arabica coffee (KCZ26) on Wednesday closed up +4.85 (+1.56%), while November ICE robusta coffee (RMX26) closed down -58 (-1.70%).

Arabica coffee prices rallied on Wednesday, reversing Tuesday’s -1.39% decline that was driven by news that nearly 28,000 bags of arabica coffee are pending grading at the Intercontinental Exchange, the highest total in over a month.  Indeed, ICE arabica coffee inventories on Wednesday rose to 239,748 from Tuesday’s 5-week low of 234,901 bags.  In the bigger picture, however, ICE inventories have trended lower over the past month and are only moderately above the 27-year low of 217,646 bags posted on September 15, an underlying bullish factor for arabica coffee prices.

By contrast, ICE robusta inventories soared to a 1-year high of 6,380 lots on Wednesday, pushing robusta prices lower.

Coffee prices have underlying support from concerns that the super-El Niño weather pattern could hurt next year’s Brazilian and Vietnamese coffee crops.  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.

Favorable growing conditions in Brazil and Vietnam are bearish for coffee prices.  Above-normal rainfall in Brazil during the now-critical flowering stage may boost next year’s 2026/27 coffee harvest, a bearish factor for prices.  Somar Meteorologia reported Monday 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.  On September 24, Conab, Brazil’s crop forecasting agency, raised its 2026 Brazil coffee production estimate to 67.6 million bags from 66.7 million bags.  Brazil’s 2026 arabica coffee production is expected to rise +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).

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. 

Adding to bearish pressure on coffee prices, the International Coffee Organization (ICO) on September 10 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 with a 3 million bag surplus, the first surplus in five years.

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.