Arabica coffee prices rose 1.05% today, buoyed by a strengthening Brazilian real, which reached a 3.5-week high. This uptick in the real is likely to discourage export sales from Brazil, a key coffee producer. However, gains are tempered by StoneX’s forecast of a significant global coffee surplus, projected to expand to 10 million bags in 2026, the largest surplus in six years, amidst expectations of a record Brazilian coffee crop.
The outlook for coffee remains complex. While below-normal rainfall in Brazil supports prices, the anticipated record crop—estimated at 75.9 million bags—could lead to increased supply pressures. Additionally, rising inventories of arabica coffee on ICE and declining exports from Brazil further complicate the market dynamics. Meanwhile, robusta coffee supplies are tightening, with inventories at a 3.5-month low, providing some support for robusta prices.
Market professionals should note that while current price movements may reflect short-term factors, the long-term supply outlook could weigh heavily on coffee prices, especially if the anticipated surplus materializes as forecasted.
Source: nasdaq.com