Coffee prices are experiencing a three-week decline, with December arabica coffee (KCZ26) down 1.80 cents (-0.63%) and November ICE robusta coffee (RMX26) down 40 cents (-1.15%). Arabica has fallen to a 2.5-month low, primarily driven by projections from the International Coffee Organization (ICO) for record global coffee production and a surplus. The ICO forecasts a 2025/26 global coffee production of 183.6 million bags, up 4.4% year-on-year, while consumption is predicted to drop 0.9% to 180.6 million bags, leaving a surplus of 3 million bags, the first in five years.
Contributing to the surplus, Brazil’s coffee exports saw a significant increase in August, rising 31% year-on-year to 4.155 million bags. Meanwhile, beneficial rainfall in Brazil and Vietnam is expected to bolster next year’s harvest, with Brazil’s rainfall recently hitting 1,212% of its historical average. Conversely, arabica inventories on ICE have dropped to a 27-year low of 217,646 bags, whereas robusta inventories have risen to a 9.5-month high of 5,043 lots.
Concerns about the El Niño weather pattern could further impact future crop yields, with predictions suggesting it could cause adverse weather conditions during Brazil’s critical flowering months. As of July, the USDA projected a 6% increase in global coffee output for the 2026-27 season, primarily due to improved conditions in Brazil, potentially reaching a record 189.7 million bags.
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