FX.co ★ Arabica Coffee Market Faces Oversupply Pressure

Arabica coffee futures were trading near $2.80 per pound, hovering around their lowest level since July 2025 and more than 30% below the eight-month high of $4.23 reached on November 11. The decline has been driven by a marked improvement in global supply expectations, led by Brazil, the world’s largest producer. Brazil’s crop forecasting agency, Conab, recently projected a record 2026/27 harvest of 66.2 million bags, supported by favorable rainfall in key growing regions such as Minas Gerais. In addition, a rebound in ICE-monitored inventories and surging exports from Vietnam have eased the supply tightness that dominated much of 2025. While a stronger Brazilian real has prompted some short covering, overall sentiment remains subdued as the market appears to be transitioning from scarcity toward a potential surplus.