Daily Coffee Report 10/26/26
Daily coffee report
StoneX Coffee Team
- Coffee
Currency Crossroads: Why Exchange Rates May Be the Next Big Driver of Coffee Prices
Alexis Rubinstein
Managing Editor - Coffee Network
CoffeeNetwork (New York) – As the coffee sector enters the final quarter of 2026, four currencies stand out as especially important: the U.S. dollar, the Brazilian real, the Vietnamese dong and the Colombian peso. Together, they influence the competitiveness of the world's largest coffee exporters, affect producer selling decisions and help shape the direction of both arabica and robusta futures. Recent developments suggest that currency markets could become an increasingly important factor for coffee prices in the months ahead.
The most influential of these remains the U.S. dollar. Because coffee is traded internationally in dollars, fluctuations in the currency reverberate throughout the supply chain. The dollar has strengthened during September after the Federal Reserve raised interest rates and signaled that monetary policy could remain restrictive well into 2027. Analysts tracking the U.S. Dollar Index estimate the benchmark gauge has rebounded to around 101 after weakening during July and August.
For coffee-importing countries, a stronger dollar increases the local-currency cost of purchases. For producing nations, however, dollar strength often boosts local returns from exports, encouraging sales when growers convert export revenues into domestic currency. Historically, periods of dollar appreciation have tended to weigh on commodity markets broadly, while softer dollar environments have frequently provided support to coffee prices. The trajectory of U.S. inflation, employment growth and future Federal Reserve policy decisions will likely remain key drivers of the currency through the remainder of the year.
If the dollar is the global benchmark, the Brazilian real is arguably the most important currency for coffee itself.
Brazil remains by far the world's largest producer and exporter, and movements in the real can have an immediate impact on farmer selling decisions. A weaker real increases the number of Brazilian reais received for each dollar earned from exports, often encouraging growers and exporters to market coffee more aggressively. Conversely, a stronger real can reduce selling pressure and tighten nearby availability.
The currency has become increasingly sensitive to domestic political developments as Brazil approaches its presidential election. Recent market reports indicate the real has traded near R$5.1 per dollar while investors assess the fiscal outlook under the country's next administration. Polling has shown a competitive race, and market participants continue to focus on questions surrounding government spending, fiscal discipline and long-term debt sustainability.
For coffee traders, the timing is particularly important. The election is unfolding as Brazil harvests what Conab recently estimated to be a record 67.6 million-bag coffee crop. A significant move in the real could influence how rapidly that coffee reaches export channels during the fourth quarter and early 2027, potentially affecting global supply availability and futures pricing.
While Brazil dominates arabica, Vietnam plays a similarly important role in robusta, and its currency story is markedly different.
Unlike the real, the Vietnamese dong is tightly managed by the State Bank of Vietnam and rarely experiences the type of volatility seen in other emerging-market currencies. Analysts at MUFG Research recently projected the dong would remain relatively stable through year-end, with USD/VND likely trading near 26,000 to 26,100. The forecast reflects strong foreign direct investment inflows, favorable capital flows and expectations that Vietnamese policymakers will keep interest rates steady.
That stability has helped Vietnam maintain its export competitiveness even as global markets experience periodic turbulence. For robusta traders, the dong generally acts less as a source of day-to-day volatility and more as an indicator of broader economic conditions. Key issues to watch include foreign investment trends, credit growth, trade balances and the evolution of U.S.-Vietnam trade relations. Any shift in those areas could alter the currency outlook and, by extension, Vietnam's position within the global robusta market.
The fourth currency attracting increasing attention is the Colombian peso. Colombia's currency has emerged as one of the strongest-performing currencies in Latin America this year, supported by strong capital inflows, record remittances, elevated interest rates and improved investor sentiment following the country's presidential election. Reports indicate the peso has appreciated roughly 19% to 23% against the U.S. dollar during 2026, a remarkable reversal from the weakness seen several years ago.
For Colombian coffee growers, peso strength presents a mixed picture. While a stronger currency helps contain inflation and lowers import costs, it also reduces the number of pesos earned for each dollar of export revenue. That dynamic can pressure producer margins and discourage selling, particularly during periods when international coffee prices are already under pressure.
Looking forward, the market's attention is shifting from the election itself to the country's fiscal outlook. Economists continue to monitor budget deficits, inflation trends, oil prices and future central bank policy. Colombia's economy remains closely linked to energy exports, meaning shifts in oil prices could have significant implications for the peso and, indirectly, for coffee export competitiveness.
Taken together, these four currencies underscore a reality sometimes overshadowed by weather headlines and crop estimates: foreign-exchange markets are increasingly shaping the competitive landscape of global coffee trade.
For the remainder of 2026, the Brazilian real may remain the currency with the greatest influence on coffee prices, given Brazil's record crop and looming election. The U.S. dollar will continue to set the broader tone across commodity markets, while movements in the Colombian peso and Vietnamese dong could affect the pace of exports from two of the coffee industry's most important suppliers.
As traders assess supply prospects for the coming year, exchange rates may prove nearly as important as rainfall totals and harvest estimates in determining where coffee prices head next.
Alexis Rubinstein
- Coffee
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