Coffee futures experienced a notable decline on Thursday, with May arabica coffee (KCK26) closing down -2.40 points, or -0.81%, and May ICE robusta coffee (RMK26) settling lower by -73 points, a -2.07% drop. This downturn was primarily attributed to a strengthening U.S. dollar ($DXY) and a burgeoning outlook for a record coffee crop from Brazil, the world’s largest producer.
Macroeconomic Headwinds and Market Performance
The appreciation of the U.S. dollar typically exerts downward pressure on commodity prices, making dollar-denominated goods like coffee more expensive for holders of other currencies. This macroeconomic factor played a significant role in Thursday’s market movements, contributing to the broader bearish sentiment. The decline in both arabica and robusta contracts underscores a market reacting to fundamental supply-side expectations and currency dynamics.
Brazil’s Record Harvest Prospects Weigh on Prices
A key driver of the price fall is the increasingly favorable outlook for Brazil’s 2026/27 coffee crop. Recent projections from leading analysts point towards a substantial increase in production. Marex Group Plc, for instance, projected a record 2026/27 Brazil coffee crop of 75.9 million bags, representing a significant +15.5% year-over-year increase. This figure surpasses Sucafina’s forecast of 75.4 million bags.
Further reinforcing this optimistic supply picture, StoneX earlier this month raised its Brazil 2026/27 coffee production estimate to a record 75.3 million bags, an upward revision from its November estimate of 70.7 million bags. These revised forecasts suggest a robust recovery and expansion in Brazil’s coffee output, directly impacting global supply expectations.
Earlier in the year, Brazil’s crop forecasting agency, Conab, on February 5, stated that Brazil’s 2026 coffee production is expected to climb by +17.2% year-over-year to a record 66.2 million bags. This includes an estimated +23.2% year-over-year increase in arabica production to 44.1 million bags and a +6.3% year-over-year rise in robusta production to 22.1 million bags. Globally, Rabobank projected on March 4 that total coffee production could reach a record 180 million bags in the 2026/27 season, an increase of approximately 8 million bags from the previous year.
Global Supply Dynamics and Robusta’s Influence
Beyond Brazil, soaring coffee exports from Vietnam, the world’s largest robusta producer, are also contributing to bearish pressure, particularly on robusta prices. Vietnam’s National Statistics Office reported on March 6 that the country’s 2026 coffee exports for January-February rose by 14% year-over-year to 366,000 metric tons. Furthermore, Vietnam’s 2025 coffee exports jumped by +17.5% year-over-year to 1.58 million metric tons, with 2025/26 production projected to climb +6% year-over-year to a four-year high of 1.76 million metric tons (equivalent to 29.4 million bags).
The USDA’s Foreign Agriculture Service (FAS) in its bi-annual report on December 18, projected world coffee production in 2025/26 to increase by +2.0% year-over-year to a record 178.848 million bags, driven primarily by a +10.9% increase in robusta production to 83.333 million bags, despite a forecasted -4.7% decrease in arabica production. FAS also forecasted Vietnam’s 2025/26 coffee output to rise by 6.2% year-over-year to a four-year high of 30.8 million bags.
Inventory Levels and Export Data
Inventory movements also played a role in the recent price action. ICE-monitored arabica inventories rose to a 6.25-month high of 585,621 bags on March 18, putting pressure on arabica prices. Conversely, ICE robusta inventories fell to a 3.5-month low of 4,093 lots on Wednesday, which could be seen as supportive for robusta prices, though this was ultimately outweighed by other bearish factors.
Recent export data from Brazil presented a mixed picture. Brazil’s February green coffee exports fell by -27% year-over-year to 2.3 million bags, according to Cecafe. Separately, Brazil’s Trade Ministry reported on March 19 that the country’s February coffee exports declined -17.4% year-over-year to 142,000 metric tons. Globally, the International Coffee Organization (ICO) reported on November 7 that global coffee exports for the current marketing year (October-September) fell -0.3% year-over-year to 138.658 million bags.
Countervailing Factors and Regional Concerns
Despite the prevailing bearish sentiment, several factors have offered some underlying support to coffee prices. The closure of the Strait of Hormuz has disrupted global shipping, leading to tightened global coffee supplies and increased shipping rates, insurance, and fuel costs for importers and roasters. Additionally, below-normal rainfall in Brazil’s key growing regions has raised some concerns; Somar Meteorologia reported that Minas Gerais, Brazil’s largest arabica coffee-growing area, received only 11.7 mm of rain last week, or 47% of the historical average. While the FAS report projected a -3.1% year-over-year decline in Brazil’s 2025/26 coffee production to 63 million bags and a -5.4% fall in 2025/26 ending stocks to 20.148 million bags, these earlier estimates appear to be overshadowed by the more recent, higher production forecasts for the subsequent 2026/27 season.
Ultimately, the current trajectory for coffee prices is heavily influenced by the robust supply outlook from Brazil and Vietnam, coupled with a stronger U.S. dollar. While logistical challenges and regional weather anomalies present some counterbalancing forces, the market appears to be primarily reacting to expectations of ample global supply, suggesting that downward pressure may persist in the near term.
