A Lower Brazilian Real and Increased Exports Continue to Push Coffee Prices Down – CoffeeTalk

On Wednesday, December arabica coffee (KCZ26) closed down by -7.00 (-2.38%), and January ICE robusta coffee (RMF27) dropped -21 (-0.65%). The decline in NY arabica coffee to a two-week low is attributed to concerns that Brazilian exporters may increase sales after a -9% drop in the Brazilian real following President Luiz Inacio Lula da Silva’s unexpected election victory. Though the real has slightly recovered, it remains down -8% for the week, prompting exporters to sell more coffee to benefit from better dollar pricing.

ICE reported a backlog of 41,961 bags of Brazilian coffee awaiting grading, the highest in six weeks, creating additional pressure on coffee prices. While Brazilian coffee has surged into ICE warehouses since mid-September, resulting in a nine-month inventory high of 80,084 bags, certified stocks remain low. ICE arabica inventories fell by -2,787 bags to a 1.5-month low of 222,035, approaching a 27-year low of 217,646 recorded on September 15. In contrast, ICE robusta inventories saw a steep rise, reaching a 1.25-year high of 6,755 lots.

Recent rainfall in Brazil’s Minas Gerais, significant for arabica coffee cultivation, amounted to 29.6 mm, or 82% of historical averages, which may favorably impact next year’s 2026/27 coffee harvest. Conversely, adverse weather patterns such as super-El Niño pose risks to future crops, especially for Vietnam’s Central Highlands, where potential drought conditions could emerge later this year.

Brazil’s coffee supply indicators are bearish; exports for September were reported to have increased by over 20% year-on-year to 236,000 MT, while the country’s crop forecasting agency, Conab, raised its 2026 production estimate to 67.6 million bags. Notably, arabica production in Brazil is projected to rise by +34.8% year-on-year, whereas robusta production is expected to decline by -6.6%.

Vietnam’s coffee exports, which rose +53% year-on-year to 124,000 MT in September, further pressured robusta prices. Projections indicate Vietnam’s 2025/26 coffee production is set to achieve a four-year high of 1.76 MMT (29.4 million bags). Conversely, Colombia’s coffee production and exports are declining, with a reported -15% year-on-year drop in 2025/26 production to 12.65 million bags.

The International Coffee Organization (ICO) noted a record global coffee crop, anticipating a surplus with global production up +4.4% year-on-year to 183.6 million bags, while consumption was projected to decrease by -0.9% year-on-year, leading to a surplus of 3 million bags—marking the first surplus in five years.

Lastly, the USDA biannual forecast reinforces bearish sentiments, projecting a +6.0% increase in global coffee output for the 2026-27 season to a record 189.7 million bags, primarily due to improved Brazilian conditions. The forecast anticipates a +12% increase in global arabica production, contrasting with a slight decline in robusta output, and projects an increase in world ending stocks.

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