December arabica coffee (KCZ26) closed up 3.25 points (+1.18%) on Friday, while November ICE robusta coffee (RMX26) rose 77 points (+2.34%).
Coffee prices settled higher, with arabica reaching a one‑week peak. A decline in the U.S. dollar index on Friday triggered fund short‑covering in coffee futures, driving prices upward.
Earlier in the week, coffee had been under pressure, hitting three‑month lows as global supply outlooks worsened. The International Coffee Organization (ICO) projected a record‑high production of 183.6 million bags for 2025/26, a 4.4% year‑over‑year increase, while consumption was expected to fall 0.9% to 180.6 million bags, leaving a 3‑million‑bag surplus—the first in five years.
Brazil’s crop agency, Conab, raised its 2026 coffee production estimate to 67.6 million bags from 66.7 million. Arabica output is forecast to jump 34.8% year‑over‑year to 48.21 million bags, whereas robusta is seen declining 6.6% to 19.39 million bags.
Favorable weather in Brazil and Vietnam is maintaining a bearish outlook. Minas Gerais, Brazil’s main arabica region, received 33.4 mm of rain (242% of the historic average) during the week ended September 20, supporting next season’s bloom. In Vietnam, abundant rains have improved soil moisture and cherry development across the Central Highlands, the country’s largest coffee‑producing area.
Brazil’s harvest is now entering export markets, adding to global supplies. August exports rose 31% year‑over‑year to 4.155 million bags, with arabica exports up 26% to 2.87 million bags and robusta up 54% to 953,592 bags. The Trade Ministry reported a 44.6% increase in August coffee exports to 206,618 MMT, the highest level in eight months.
Vietnam, the world’s top robusta producer, is also expanding shipments. January‑August 2026 exports climbed 13.7% year‑over‑year to 1.33 million metric tons, while 2025 exports surged 17.5% to 1.58 million metric tons. The 2025/26 production outlook stands at 1.76 million metric tons (29.4 million bags), a six‑percent increase.
Inventory trends diverge between the two grades. ICE arabica inventories fell to a 27‑year low of 217,646 bags before rebounding to 258,415 bags, supporting arabica prices. Conversely, ICE robusta inventories rose to a ten‑month high of 5,398 lots, pressuring robusta.
El Niño concerns are providing a bullish counterweight. The pattern may delay critical September‑October rainfall in Brazil, potentially harming the 2026/27 coffee crop. The U.S. Climate Prediction Center warns that the emerging El Niño could be among the strongest in over 75 years, risking floods, droughts, and temperature swings that could affect coffee production across Asia and South America.
The USDA’s latest biannual forecast remains bearish. It predicts global coffee output for the 2026‑27 season to rise 6% to a record 189.7 million bags, driven by improved Brazilian conditions. Arabica production is expected to increase 12% year‑over‑year, while robusta is seen edging down 0.7%. World ending stocks are projected to climb 1.9 million bags to 26.3 million bags. Earlier, the USDA’s Foreign Agricultural Service forecasted a record 71.9 million‑bag Brazilian crop for 2026/27, up 14% year‑over‑year.
