Daily Coffee Report 8/12/26
Daily coffee report
StoneX Coffee Team
- Coffee
Coffee Rebounds After February Rout, but Market Remains Caught Between Short‑Term Tightness and Long‑Term Surplus Fears
By: Alexis Rubinstein, Managing Editor - Coffee Network
CoffeeNetwork (New York) - After one of the sharpest monthly selloffs in recent years, the global coffee market has entered a period of uneasy stabilization. Prices have rebounded through March, but volatility remains elevated as traders and roasters weigh tightening short‑term availability against increasingly confident projections of surplus supply later this decade.
Arabica futures on ICE are trading near 315–320 cents per pound, up more than 12% from late‑February lows, marking a decisive bounce from the liquidation‑driven collapse that defined last month’s trading. Yet despite the rebound, prices remain well below February 2025’s historic highs, underscoring a market struggling to reconcile near‑term supply risks with a rapidly shifting longer‑term outlook.
February’s Collapse: A Market Priced for Surplus
The February rout was not triggered by falling demand, but by a dramatic revision in global supply expectations. The International Coffee Organization (ICO) reported that its Composite Indicator Price averaged 267.57 cents per pound in February, down nearly 10% month over month—the steepest decline since mid‑2025.
At the center of the selloff was Brazil. Early February forecasts from CONAB projected Brazil’s 2026/27 coffee output at 66.2 million bags, and StoneX sees production at a record 75.3 million bags, signaling a return to a positive Arabica biennial cycle after several weather‑disrupted seasons. These figures reinforced broader expectations that global production could swing decisively into surplus after three consecutive deficit years.
Vietnam added further bearish pressure. As the world’s dominant Robusta producer, the country entered 2026 with record export momentum, shipping more than 224,000 tons in January alone, generating over $1 billion in revenue during the month. Together, Brazil and Vietnam’s outlooks prompted aggressive fund liquidation across both the New York and London markets.
Why the Market Is Recovering in March
While February was dominated by macro supply expectations, March trading has shifted back toward physical realities. Several near‑term constraints have reasserted themselves, slowing the momentum of the bearish narrative.
Brazilian exports, in particular, have failed to match earlier optimism. February shipments of Brazilian green coffee fell between 17% and 27% year over year, depending on the reporting source, limiting nearby availability just as roasters move deeper into second‑quarter coverage. Producers, still scarred by February’s price collapse, have also shown reluctance to sell aggressively at sub‑300‑cent levels, tightening spot supply.
Logistics risks have compounded the situation. Rising freight costs and renewed shipping uncertainty have increased replacement risk for importers, adding support beneath front‑month contracts. ICE‑certified inventories, while improved from 2024’s extreme lows, remain unevenly distributed and vulnerable to sudden drawdowns.
Structural Tension: Tight Now, Softer Later
The current market reflects a classic transitional phase: tight availability in the front half of the calendar year set against mounting confidence in future supply growth.
On the bullish side, global stocks remain historically thin after several seasons of weather shocks and logistical disruption. Climate risk has not disappeared, and key flowering periods in Brazil and Central America remain ahead, leaving room for renewed volatility should conditions deteriorate.
On the bearish side, forward‑looking models increasingly point toward surplus. Analysts project global coffee production could reach 178–180 million bags in the 2026/27 cycle, potentially generating a surplus of 8–9 million bags if weather cooperates and exports flow as expected. Brazil’s longer‑term output estimates—from CONAB, USDA, and StoneX—continue to trend higher, even accounting for ongoing climate variability.
Arabica vs. Robusta: Diverging Signals
A key feature of the current market is the divergence between Arabica and Robusta fundamentals. Robust supply growth from Vietnam has kept Robusta prices comparatively resilient, as roasters continue increasing its share in commercial blends amid cost pressures. Arabica, by contrast, remains more sensitive to Brazil‑specific weather and farmer selling decisions
This divergence has narrowed New York–London arbitrage spreads and reshaped hedging strategies across the trade, particularly for large roasters managing blend flexibility.
What the Trade Is Watching Next
As the market moves deeper into the second quarter, several variables will determine whether March’s rebound holds or fades:
- Brazilian weather through April and May, which will be critical for flowering and yield realization
- Vietnam’s selling pace, particularly whether exporters continue pushing volume or defend price levels
- Fund positioning, with room for re‑entry should weather or logistics risks re‑emerge
- Roaster coverage, which remains uneven beyond Q3 amid lingering volatility
February’s collapse was driven by fear of future abundance. March’s rebound reflects fear of being short in the present.
For now, the coffee market remains suspended between these two realities: immediate tightness and longer‑term surplus risk. Absent a major weather shock or logistical disruption, prices may struggle to revisit last year’s highs—but the path lower is unlikely to be smooth.
Alexis Rubinstein
- Coffee
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Daily Coffee Report 8/11/26
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