Coffee Market Gains Momentum as Brazilian Real Strengthens Against Dollar

Arabica and robusta futures posted solid gains today, rebounding from recent pressure as currency movements and shifting supply dynamics ripple through the global coffee market. May arabica coffee (KCK26) climbed +6.00 points, or +2.16%, while May ICE robusta coffee (RMK26) advanced +72 points, or +2.02%. The recovery marks a reversal from downward pressure that has dominated the coffee market over the past month, with arabica pulling back from a 15-month low and robusta bouncing off its 6.5-month bottom.

The turnaround in today’s coffee market session stems largely from currency strength. Brazil’s real has rallied sharply against the dollar, reaching near a 1.75-year high with a +0.38% daily gain. This stronger real makes Brazilian coffee exports less competitive on the global stage, as exporters receive fewer dollars for their shipments at current exchange rates. The reduced incentive to sell has triggered short-covering activity among traders who had positioned for lower prices, providing immediate support to coffee futures.

Supply Surge from Brazil and Vietnam Pressures Global Coffee Market

The fundamental backdrop for the coffee market remains challenging, shaped by an expected wave of production increases from the world’s largest producers. In early February, Brazil’s crop forecasting agency Conab projected that the country’s 2026 coffee output will surge by +17.2% year-over-year to a record 66.2 million bags. Within this total, arabica production is forecast to jump +23.2% to 44.1 million bags, while robusta output is expected to rise +6.3% to 22.1 million bags. Favorable weather patterns across Brazil’s coffee-growing regions have bolstered these production forecasts. Minas Gerais, Brazil’s largest arabica-growing area, received 62.8 mm of rain during the week ended February 13—representing 138% of the historical average—reinforcing an optimistic outlook for the coming harvest.

Vietnam’s coffee market dynamics present another downside pressure point. As the world’s largest robusta producer, Vietnam reported surging export volumes in recent months, with January shipments jumping +38.3% year-over-year to 198,000 metric tons. For the full 2025 calendar year, Vietnam’s coffee exports reached 1.58 million metric tons, a +17.5% annual increase. Looking ahead, Vietnam’s 2025/26 production is projected to climb +6% year-over-year to 1.76 million metric tons (29.4 million bags), marking a 4-year production high. This export surge from the world’s largest robusta supplier weighs on the coffee market, particularly for robusta contract prices.

Inventory Recovery and Export Weakness: Mixed Signals in the Coffee Market

The coffee market is receiving conflicting signals from warehouse stocks and shipment activity. Arabica inventories monitored by ICE fell to a 1.75-year low of 396,513 bags in mid-November but subsequently recovered to a 3.75-month high of 461,829 bags by early January. Similarly, robusta inventories dropped to a 14-month low of 4,012 lots in December but rebounded to a 2.75-month high of 4,662 lots by late January. The recovery in these exchange-monitored supplies suggests adequate stocks are available to meet demand, placing a ceiling on price appreciation across the coffee market.

However, recent export data reveals softer shipment activity from Brazil itself. The country’s Trade Ministry reported that January coffee exports fell -42.4% year-over-year to 141,000 metric tons, suggesting delayed shipments ahead of the new harvest. This pullback in Brazilian sales provides modest support for the coffee market, though it appears temporary in nature.

Production Shifts Reshape Global Coffee Market Outlook

Colombia, the world’s second-largest arabica producer, is experiencing a sharp production contraction. The National Federation of Coffee Growers reported that January production tumbled -34% year-over-year to 893,000 bags, a decline that supports prices in the coffee market by reducing global supply. Meanwhile, the broader global picture remains uncertain. The International Coffee Organization reported that global coffee exports for the current marketing year (October-September) fell just -0.3% year-over-year to 138.658 million bags, indicating a relatively stable trading environment despite regional disruptions.

The USDA’s Foreign Agriculture Service provided a comprehensive 2025/26 outlook in mid-December. The agency projects world coffee production will increase +2.0% year-over-year to 178.848 million bags, with critical shifts between variety types: arabica production is expected to decline -4.7% to 95.515 million bags, while robusta production is forecast to surge +10.9% to 83.333 million bags. For Brazil specifically, FAS anticipates 2025/26 output will edge down -3.1% year-over-year to 63 million bags, suggesting some moderation in the earlier Conab forecasts. Vietnam’s 2025/26 output is projected by FAS to climb +6.2% year-over-year to 30.8 million bags, a 4-year peak.

Critically for the coffee market price outlook, FAS forecasts that 2025/26 ending stocks will contract by -5.4% to 20.148 million bags, down from 21.307 million bags in 2024/25. This projected inventory drawdown could eventually provide support for coffee market prices, though near-term pressures from ample supplies will likely persist as major producers bring new harvests to market.

The coffee market thus faces competing forces: currency movements and short covering providing near-term support, balanced against an influx of global supplies that keeps fundamental pressure in place over a longer timeframe.