Coffee Prices Drop to Three-Month Lows Amid Surging Global Supplies and Favorable Growing Conditions

December arabica coffee futures (KCZ26) settled lower by 4.10 points (-1.48%) on Tuesday, while November ICE robusta coffee contracts (RMX26) declined 77 points (-2.31%), extending losses into a second consecutive session and reaching three-month lows.

The continued downward pressure on coffee prices reflects expectations of ample global supplies. On September 10, the International Coffee Organization (ICO) forecast a record global coffee harvest alongside a market surplus. According to the ICO, worldwide coffee production in the 2025/26 season increased by 4.4% year-over-year to 183.6 million bags, while consumption slipped 0.9% to 180.6 million bags, resulting in a 3-million-bag surplus—the first in five years.

Losses accelerated in robusta coffee following a rise in ICE robusta coffee inventories, which climbed to a 9.75-month high. Meanwhile, favorable weather conditions in key growing regions continue to weigh heavily on market sentiment.

In Brazil, above-normal rainfall during the crucial flowering phase has raised concerns among traders regarding its impact on the upcoming 2026/27 harvest. Data from Somar Meteorologia revealed that 33.4 mm of precipitation—equivalent to 242% of the historical average—was recorded in the week ending September 20 in Minas Gerais, Brazil’s primary arabica-producing region. Similarly, in Vietnam, improved soil moisture levels due to abundant rains are expected to support cherry development in the Central Highlands, the country’s largest coffee-producing area.

As Brazil concludes its harvest season, increased outbound shipments are flooding global markets and pressuring prices. According to Cecafe, Brazil’s total coffee exports surged 31% year-over-year to 4.155 million bags in August—an unprecedented level for that month. Arabica exports jumped 26% to 2.87 million bags, while robusta exports rose sharply by 54% to 953,592 bags. Additional data from Brazil’s Trade Ministry showed that August coffee exports expanded 44.6% year-over-year to 206,618 metric tons—the highest volume in eight months.

Vietnam, the world’s leading robusta producer, is likewise contributing to bearish market dynamics through substantial export volumes and rising output projections. Vietnam’s General Statistics Office reported that coffee exports from January through August 2026 climbed 13.7% year-over-year to 1.33 million metric tons. For full-year 2025, exports reached 1.58 million metric tons, marking a 17.5% increase compared to the prior year. Furthermore, Vietnam’s 2025/26 coffee production is projected to grow 6% annually to 1.76 million metric tons—a four-year peak—equating to approximately 29.4 million bags.

While declining arabica stockpiles have offered some support, ICE arabica coffee inventories dropped to a 27-year low of 217,646 bags last Tuesday before rebounding slightly to 258,415 bags—the highest since early August. In contrast, rising robusta inventories continue to exert downward pressure, with ICE robusta stocks reaching a 9.75-month high of 5,088 lots on Tuesday.

Market participants remain cautious amid concerns over a potential El Niño event that could disrupt future crop yields. Coffee trader Commercial noted that El Niño may delay seasonal rains in Brazil during October—coinciding with peak flowering periods—potentially jeopardizing the 2026/27 crop. The U.S. Climate Prediction Center confirmed on July 8 that El Niño conditions had emerged over the equatorial Pacific, warning that it may rank among the strongest events in over 75 years, increasing the likelihood of extreme weather patterns such as floods, droughts, and temperature volatility across producing regions in Asia and South America.

The latest USDA biannual report painted a bearish outlook for coffee prices globally. Released on July 22, the report projected world coffee output for the 2026-27 season to expand by 6.0%—or 10.8 millionbags—to a record 189.7 million bags, primarily driven by improved agronomic conditions in Brazil. The agency anticipates global arabica production to rise 12% annually, despite a modest 0.7% decline expected in robusta output. Ending stocks are forecast to rise by 1.9 million bags to 26.3 million bags. Earlier, on June 3, the USDA’s Foreign Agricultural Service (FAS) projected Brazil’s 2026/27 coffee crop at a record 71.9 million bags—an increase of 14% compared to the previous year.

As of the publication date, Rich Asplund held no direct or indirect positions in any securities referenced in this article. This content is intended solely for informational purposes.
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