Coffee Prices Retreat on Brazilian Real Strength
- Arabica fell 2.79% and robusta dropped 0.96% on Tuesday.
- A weaker Brazilian real encouraged exporters to increase coffee sales.
- Vietnam’s October coffee exports jumped 61% year-on-year.
- ICE arabica inventories fell to a 7-week low of 220,379 bags.
- The International Coffee Organization projected a 3 million bag global surplus, the first in five years.
- USDA forecast record global production of 189.7 million bags for 2026/27.
- El Niño concerns provide underlying support despite bearish pressure.
Coffee prices retreated on Tuesday amid weakness in the Brazilian real. The real fell 1% on Tuesday and is just above last Monday’s 10.25-month low against the dollar. The real is under pressure following President Luiz Inacio Lula da Silva’s surprise victory in last week’s Brazilian presidential election.
A weaker Brazilian real encourages exporters to sell more coffee. They can get a higher dollar price for their sales. Brazil is the world’s largest coffee producer and exporter by a substantial margin, accounting for 35-40% of world production and nearly 30% of world coffee exports.
Weaker Real Drives Exporters to Sell
When the real falls, Brazilian exporters earn higher local-currency revenue for dollar-denominated sales. This encourages them to increase volumes, which in turn pressures global prices. The currency weakness followed political developments in Brazil, which added uncertainty to the market.
| Indicator | Change |
|---|---|
| Arabica (December contract) | -8.15 cents (-2.79%) |
| Robusta (January contract) | -31 points (-0.96%) |
| Brazilian real vs dollar | -1% |
| Vietnam October exports | +61% year-on-year |
Strong Vietnamese Exports Pressure Robusta
News of higher coffee exports from Vietnam undercut robusta coffee prices. Vietnam is the world’s largest producer of robusta coffee. Vietnam’s National Statistics Office reported Tuesday that October coffee exports rose 61% year-on-year to 114,000 metric tons. Exports from January to October 2026 rose 18.8% year-on-year to 1.57 million metric tons.
Vietnam’s 2025 coffee exports jumped 17.5% to 1.58 million metric tons. Production for 2025/26 is projected to rise 6% to a four-year high of 1.76 million metric tons, or 29.4 million bags.
Brazilian Coffee Arriving Rapidly at ICE Warehouses
Last Wednesday, New York December arabica prices fell to a 5-week low. The main reason was fears that Brazilian exporters will increase sales after the real tumbled to a 10.25-month low.
Coffee also saw downside pressure after ICE reported 55,396 bags of Brazilian coffee awaiting grading at its warehouses as of Tuesday. That is the most in 7 weeks. As coffee passes grading tests, ICE adds it to the certified warehouse inventory figures. However, grading can take one to two weeks or longer if volume is high.
Coffee has been arriving rapidly from Brazil since mid-September. ICE inventories of Brazilian coffee rose to a 9-month high of 83,052 bags last Thursday and Friday.
| Category | Level | Status |
|---|---|---|
| Arabica | 220,379 bags | 7-week low |
| Robusta | 6,741 lots | Near 1.25-year high |
| Brazilian coffee awaiting grading | 55,396 bags | 7-week high |
Tight Inventories May Limit Downside
Tight coffee inventories may limit the downside in coffee prices in the near term. ICE arabica inventories fell to a 7-week low of 220,379 bags on Tuesday. That is only modestly above the 27-year low of 217,646 bags posted on September 15.
While Brazilian coffee has been arriving at ICE warehouses, it has not yet appeared in significant amounts in ICE-certified stocks. Meanwhile, ICE robusta inventories have risen sharply since early October. They posted a 1.25-year high of 6,809 lots on Thursday, backing off to 6,741 lots on Tuesday.
Favorable Growing Conditions in Brazil and Vietnam
Somar Meteorologia reported last Monday that 29.6 mm of rain fell in Brazil’s Minas Gerais in the week ended October 25. That represents 82% of the historical average. Minas Gerais is the country’s main arabica-coffee growing region.
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. In Vietnam, forecaster Vaisala said recent abundant rains have improved soil moisture levels. They should aid cherry development in Vietnam’s Central Highlands, the country’s largest coffee-producing region.
El Niño Concerns Provide Underlying Support
Coffee prices have underlying support from concerns that the super-El Niño weather pattern could hurt next year’s Brazilian and Vietnamese coffee crops. Vietnam’s Agriculture Ministry said on October 16 that the Central Highlands could face an El Niño-triggered drought later this year and early 2027.
Larger Brazilian Supplies and Colombian Decline
Larger coffee supplies from Brazil are bearish for prices. On October 6, Brazil’s Trade Ministry reported September coffee exports jumped more than 20% year-on-year to 236,000 metric tons. On September 24, Conab 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% year-on-year to 48.21 million bags. However, robusta production is expected to fall 6.6% to 19.39 million bags. On October 9, Colombia’s Coffee Federation reported that 2025/26 production fell 15% year-on-year to 12.65 million bags. Colombia’s 2025/26 coffee exports fell 12% to 11.78 million bags. Colombia is the world’s second-largest arabica producer.
First Global Surplus in Five Years
Adding to bearish pressure, the International Coffee Organization projected a record global coffee crop and a surplus on September 10. The ICO said 2025/26 global coffee production rose 4.4% year-on-year to a record 183.6 million bags. Consumption fell 0.9% to 180.6 million bags. This left the global coffee market with a 3 million bag surplus, the first in five years.
USDA Forecast: Record Production
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 6.0% to a record 189.7 million bags. The increase is mainly due to improved growing conditions in Brazil.
The USDA expects global arabica production to rise 12% year-on-year. However, robusta production is expected to fall 0.7%. 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 forecast a record 2026/27 Brazil coffee crop of 71.9 million bags, up 14% year-on-year.
