CoffeeNetwork (New York) - For much of 2026, the coffee market's attention has centered on Brazil's massive crop potential. Forecasts from USDA, StoneX, and others point to one of the largest harvests in the country's history, with private estimates ranging above 75 million bags. Yet despite those bearish supply expectations, arabica futures have staged a sharp rally in recent weeks. One reason is weather. Another is the Brazilian real.
The Brazilian currency has strengthened against the U.S. dollar in recent weeks, reducing producer selling incentives and helping support coffee prices. While crop size remains an important piece of the market equation, currency movements are once again reminding traders that production and exports are not the same thing. A large crop must still be marketed, sold, and shipped, and the exchange rate often plays a critical role in determining how quickly that happens.
The real has appreciated over the past several weeks, reaching its strongest levels in roughly two weeks against the dollar during the latest coffee market rally. Analysts noted that the stronger currency discouraged coffee sales by Brazilian farmers, providing additional support to ICE arabica futures at a time when harvest delays were already creating uncertainty.
The move is notable because it follows a period in June when a weaker real encouraged increased producer selling and reinforced the market's bearish focus on Brazil's record crop potential. At that time, the softer currency made exports more attractive, helping pressure arabica prices toward multi-month lows.
The recent reversal has therefore changed an important market dynamic. Instead of encouraging aggressive harvest-time sales, a stronger currency is allowing many producers to be more selective about when and how much coffee they sell.
Brazil accounts for roughly one-third of global coffee production and remains the world's largest exporter. Most coffee is priced internationally in U.S. dollars, while Brazilian farmers pay their costs and receive their income in reais.
When the real weakens against the dollar, Brazilian exporters receive more local currency for every dollar earned from foreign buyers. This typically encourages sales and increases coffee flow into export channels. Conversely, when the real strengthens, exporters receive fewer reais per dollar of coffee sold, reducing the incentive to market coffee aggressively. This can slow producer selling and tighten nearby physical availability.
The relationship is not perfect, but it is one of the most closely watched correlations in coffee trading. Many periods of coffee weakness have coincided with real depreciation, while major arabica rallies have often been reinforced by real appreciation.
The latest market action reflects this dynamic. Arabica futures recently surged to their highest levels in more than five months, with analysts specifically pointing to the stronger real as a factor discouraging farmer selling during the harvest period.
Under normal circumstances, a record Brazilian crop might overwhelm currency-related concerns. However, the current market environment is far from normal.
Harvest progress has been slowed by unusually heavy rainfall in key arabica-producing regions. Safras & Mercado reported that Brazil's harvest was 52% complete as of July 1, behind both last year's pace and the five-year average. At the same time, CEPEA has warned that excessive rainfall is complicating harvesting and drying operations while raising concerns about quality losses.
Meanwhile, certified ICE arabica inventories remain near multi-year lows. As a result, the market is highly sensitive to anything that might further delay coffee movement into commercial channels. A stronger real amplifies those concerns because producers are less motivated to accelerate sales while weather uncertainty persists.
In other words, the currency is not operating in isolation. It is reinforcing existing weather-related supply concerns.
Several factors are likely to influence the Brazilian currency during the remainder of July and into the third quarter.
Perhaps the biggest external factor is the direction of the U.S. dollar. Any signs of easier U.S. monetary policy or slowing economic growth could weaken the dollar and provide additional support for emerging-market currencies such as the real. Conversely, stronger-than-expected U.S. economic data could strengthen the dollar and pressure the Brazilian currency.
Brazil continues to maintain relatively high interest rates compared with many developed economies. Elevated rates tend to attract foreign capital seeking yield, which can support the real. Any changes in central bank policy expectations could therefore have a significant impact on currency flows.
Brazil remains one of the world's largest exporters of agricultural products, energy, and mining commodities. Strong export revenues from soybeans, sugar, coffee, beef, iron ore, and crude oil generally support the country's trade balance and can be favorable for the currency.
Investors remain attentive to Brazil's fiscal outlook. Concerns about government spending, public debt trajectories, or broader political uncertainty can create volatility in the real. Conversely, signs of fiscal discipline tend to be viewed positively by currency markets.
Ironically, coffee itself can become a factor. If weather concerns continue to support high coffee prices, export revenues could increase, potentially providing additional support to Brazil's trade accounts. At the same time, producer withholding of coffee sales could temporarily reduce export flows.
The emerging story is that the coffee market is no longer focused solely on production forecasts. For much of the first half of the year, traders concentrated on increasingly large estimates for Brazil's 2026/27 crop, including StoneX's 75.3 million-bag forecast and USDA's 71.9 million-bag projection.
Today, however, the discussion has broadened. Traders are weighing harvest delays, quality concerns, low certified inventories, producer selling behavior, and currency movements simultaneously. The stronger real has become one more reason why a record crop has not translated into the overwhelming selling pressure many expected just a few weeks ago.
For coffee market participants, the key takeaway is straightforward: the size of Brazil's crop still matters, but the pace at which those beans reach the market may increasingly depend on the direction of the Brazilian real. As long as the currency remains firm and weather concerns persist, coffee futures may continue finding support despite expectations for historically large production.
Alexis Rubinstein
This material should be construed as market commentary and represents the opinions and viewpoints of the author, and does not reflect tailored advice associated with any specific account.
The views are current only through the date stated and are subject to change at any time based upon market or other conditions, and StoneX Group Inc. (“SGI”) disclaims any responsibility to update such views. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. Past performance does not guarantee future results.
The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided.
References to certain OTC products or swaps are made on behalf of StoneX Markets, LLC (SXM), a member of the National Futures Association (NFA) and provisionally registered with the U.S. Commodity Futures Trading Commission (CFTC) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ and who have been accepted as customers of SXM.
StoneX Financial Inc. (SFI) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI is registered with the U.S. Securities and Exchange Commission (SEC) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Advisor. StoneX Financial (Canada) Inc. (SFCI) is registered in Canada and is a member of CIRO and CIPF. References to certain securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to certain exchange-traded futures and options are made on behalf of the FCM Division of SFI. Wealth Management is offered through SA Stone Wealth Management Inc., member FINRA/SIPC, and SA Stone Investment Advisors Inc., an SEC-registered investment advisor, both wholly owned subsidiaries of SGI.
R.J. O’Brien & Associates, LLC (RJO) is registered with the CFTC as a Futures Commission Merchant and is a member of NFA.
StoneX Financial Ltd (SFL) is registered in England and Wales, company no. 5616586. SFL is authorized and regulated by the Financial Conduct Authority (FCA) (registration number FRN:446717) to provide services to professional and eligible customers including: arrangement, execution and, where required, clearing derivative transactions in exchange traded futures and options. SFL is also authorized to engage in the arrangement and execution of transactions in certain OTC products, certain securities trading, precious metals trading and payment services to eligible customers. SFL is authorized and regulated by the FCA under the Payment Services Regulations 2017 for the provision of payment services. SFL is a category 1 ring-dealing member of the London Metal Exchange. In addition SFL also engages in other physically delivered commodities business and other general business activities which are unregulated and not required to be authorized by the FCA.
This communication is issued in the European Economic Area by StoneX Financial Europe GmbH (SFEG). StoneX is the trade name used by STONEX GROUP INC. and all its associated entities and subsidiaries. StoneX Financial Europe GmbH (“SFEG”) is a securities trading firm registered in Germany under Company No. HRB 80844.
StoneX APAC Pte. Ltd. (“SAP”) (Co. Reg. No 200616676W) is regulated as a Dealer (PS20190001002) under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 for purposes of anti-money laundering and countering the financing of terrorism. SAP is an “Approved International Trading Company” authorized to act as a “Spot Commodity Broker” under the Commodity Trading Act.
StoneX Financial Pte Ltd (Co. Reg. No 201130598R) (“SFP”) is regulated by the Monetary Authority of Singapore and is a Capital Markets Service Licence holder (for dealing in capital market products), an Exempt Financial Adviser (for advising on investment products and issuing or promulgating analyses/ reports on investment products) and a Major Payment Institution (for domestic and cross-border money transfer services).
SFP may distribute analysis/report produced by its respective foreign affiliates within the StoneX Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations Recipients should contact SFP at (65) 6309 1000 for any matters arising from, or in connection with, this webinar.
StoneX APAC Pte. Ltd. (“SAP”) (Co. Reg. No 200616676W) is regulated as a Dealer (PS20190001002) under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 for purposes of anti-money laundering and countering the financing of terrorism.
StoneX Financial (HK) Limited (CE No.: BCQ152) (“SHK”) is regulated by the Hong Kong Securities and Futures Commission for Dealing in Securities and Dealing in Futures Contracts.
StoneX Financial Pty Ltd (ACN 141 774 727) holds an Australian Financial Service License (AFSL: 345646) for Dealing in Securities, Exchange-Traded Derivatives Contracts, OTC Derivatives Contracts and Foreign Exchange Contracts, and is regulated by the Australian Securities and Investments Commission.
StoneX Securities Co., Ltd. (“SSJ”) (Co. Reg. No 010401047199) is regulated by the Japanese Financial Services Agency as a Type-I Financial Instruments Business Operator (Kanto Local Finance Bureau (FIBO)No.291’), is a member of the Financial Futures Association of Japan for dealing and broking FX and FX Option transactions, and is a member of the Japan Securities Dealers Association for dealing and broking stock indices and option transactions.
Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. Past performance of any futures or option is not indicative of future success. Indicators are not a trading system and are not published as a specific trade recommendation. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.
The report/analysis herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
© 2026 StoneX Group Inc. All Rights Reserved.
