December arabica coffee (KCZ26) closed up +4.80 (+1.68%) on Monday, and November ICE robusta coffee (RMX26) closed up +10 (+0.28%).
Coffee prices recovered from early losses on Monday and settled higher on technical buying. Fund short covering emerged on Monday after a 3-week selloff pushed coffee prices into extremely oversold territory.
Arabica coffee initially tumbled to a 2.5-month low on Monday on negative carryover from last Thursday when Cecafe reported that Brazil’s total coffee exports in August rose +31% y/y to 4.155 million bags, a record high for the month of August. August arabica exports rose +26% to 2.87 million bags, while robusta exports rose +54% to 953,592 bags. Brazil’s coffee is hitting the export markets as Brazil’s harvest wraps up. Separately, Brazil’s Trade Ministry reported last Tuesday that Brazil's Aug coffee exports rose +44.6% y/y to 206,618 MMT, the most in 8 months.
Coffee prices have been under pressure over the past three weeks on the outlook for abundant global supplies. Last Thursday, the International Coffee Organization (ICO) 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 in a 3 million bag surplus, the first surplus in five years.
Also, above-normal rainfall in Brazil may benefit flowering for next year’s coffee harvest, a bearish factor for prices. Somar Meteorologia reported today that 59.4 mm of rain, or 1,212% of the historical average, fell in the week ended September 13 in Brazil's Minas Gerais, the country's main arabica-coffee growing region.
On September 3, robusta fell to a 3-month low on signs of bigger coffee supplies from Vietnam, the world’s largest producer of robusta coffee. Vietnam's National Statistics Office reported last Wednesday that Vietnam's 2026 coffee exports (Jan-Aug) rose by +13.7% y/y to 1.33 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).
Falling inventories are bullish for arabica coffee prices, as ICE arabica coffee inventories fell to a 27-year low of 217,932 bags last Friday. By contrast, rising inventories are bearish for robusta coffee as ICE robusta inventories climbed to a 9.5-month high of 5,043 lots on Monday.
Concerns that an El Niño weather pattern could hurt Brazil's coffee crop next year are bullish for prices. Coffee trader Commercial said the El Niño weather pattern may delay rains in Brazil this September and October, when tree flowering normally occurs, hurting Brazil's 2026/27 coffee crop. On July 8, the US Climate Prediction Center said the El Niño weather pattern that emerged across the equatorial Pacific last month will likely be one of the strongest in more than 75 years. This sets the stage for months of possible floods, droughts, and temperature fluctuations later this year that could hinder coffee production in Asia and South America.
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.