Coffee Prices Decline as Supply Growth and FX Moves Pressure the Market

Coffee prices decline as a combination of currency movements and expanding global supply continues to weigh on sentiment. A weaker Brazilian real has emerged as a key short-term driver, encouraging export activity from the world’s largest coffee producer and increasing availability on the global market. This dynamic has kept prices under pressure despite intermittent supportive signals.

Brazilian Real Weakness Boosts Exports

One of the main reasons coffee prices decline is the slide in Brazil’s currency against the U.S. dollar. When the real weakens, Brazilian exporters receive higher local-currency returns on dollar-based sales. This typically accelerates export flows, adding supply to the market and limiting upside potential for prices.

Beyond Brazil, robusta markets are facing additional pressure from Vietnam. As the world’s leading robusta producer, Vietnam plays a critical role in shaping global supply. Recent data shows a sharp increase in Vietnamese coffee exports, reinforcing expectations of plentiful availability. This surge in shipments has been particularly bearish for robusta prices and contributes to why coffee prices decline overall.

Weather Concerns Offset by Ample Supply Outlook

Weather-related risks have offered only temporary relief. Arabica prices recently found short-term support after reports of below-average rainfall in Brazil’s Minas Gerais region, the country’s primary arabica-growing area. Reduced rainfall can raise concerns about crop stress, but so far, these worries have not been strong enough to shift the broader market direction.

Inventory trends present a more balanced picture. ICE-monitored arabica and robusta stocks previously fell to multi-month and multi-year lows, a development that would normally support prices. However, recent inventory rebuilds have softened the bullish impact, keeping traders focused on forward-looking supply expectations.

Looking ahead, production forecasts continue to dominate sentiment. Brazil’s crop agency has revised its coffee output estimates higher, while Vietnam is projected to record another strong harvest in the 2025/26 season. Although global ending stocks are expected to edge lower, the anticipated increase in robusta production remains a central factor behind why coffee prices decline.

In summary, coffee prices decline as currency-driven exports, rising production forecasts, and strong robusta supply outweigh weather risks and modest inventory tightening.

Make money without lifting your fingers: Start using a world-class auto trading solution.

EightCap, your trusted Partner in CFDs, Cryptocurrencies and Stocks.