Coffee Futures Retreat After Sharp Rally, but Supply and Weather Risks Remain (25 August 2026)
Arabica coffee futures reversed course in New York on Tuesday as traders locked in profits following Monday’s powerful rally. The decline appeared to be driven primarily by technical selling rather than a significant change in the market’s underlying supply outlook.
Most actively traded arabica contracts ended the session between 560 and 635 points lower. September settled at 371.40 cents per pound, while March finished at 321.25 cents. Robusta also weakened in London, where futures lost between US$94 and US$137 per tonne.
December arabica illustrated the day’s extreme volatility. The contract opened at 342.80 cents per pound and advanced to 345.65 before selling intensified. Prices subsequently fell as low as 329.00 cents, erasing a substantial part of the previous session’s gains.
The retreat followed an advance of almost 2,000 points on Monday, which gave speculative funds and other investors an opportunity to reduce profitable long positions. Arabica futures have risen approximately 40% since the end of June, making some degree of correction increasingly likely.
Trading conditions were also affected by the start of the September delivery notification period. Market participation was less consistent, while the absence of major new fundamental developments left technical signals with greater influence over short-term price direction.
Tight availability continues to support the market
Despite Tuesday’s decline, the broader coffee balance remains supportive. Certified exchange inventories are historically low, while stocks in both producing and consuming countries are considered limited. International buyers therefore continue to face difficulty rebuilding coverage without encouraging higher prices.
Brazilian export figures offered further evidence of restrained availability. According to Cecafé, the country shipped 1,707,729 bags between August 1 and August 24, representing a 9.3% decline based on the daily average. The total included 1,045,948 bags of arabica, 499,501 bags of robusta and 162,280 bags of soluble coffee.
Uncertainty surrounding possible US tariffs on Brazilian coffee is adding another layer of risk. Any disruption to trade flows could force buyers and sellers to reorganize supply chains at a time when readily available coffee is already scarce.
Weather returns to the centre of attention
Conditions in Brazil are likely to become increasingly important as the market begins assessing the outlook for the next crop.
A new cold front moved along the southern and southeastern coast early this week, bringing another period of cooler air to parts of south-central Brazil. However, the polar air mass is expected to remain mainly over the ocean, limiting its penetration into the principal coffee-producing areas. Temperatures should begin rising from Wednesday across northern and western São Paulo, western Minas Gerais and the Centre-West.
The immediate concern has shifted from cold to storms. Brazil’s National Institute of Meteorology issued yellow-level warnings for parts of Minas Gerais, including important coffee-growing areas. The alert covers 168 municipalities on Wednesday, August 26, and expands to 507 locations on Thursday.
Forecasts indicate rainfall of up to 50 millimetres, wind gusts reaching 60 kilometres per hour and a risk of hail. The first warning focuses on southern and southwestern Minas Gerais and Zona da Mata, while Thursday’s alert also includes the Belo Horizonte metropolitan region and Vale do Rio Doce.
Rain during the closing stages of harvesting can interrupt fieldwork and drying, while hail and strong winds may damage trees and affect future production potential. Longer-term uncertainty is also growing around the possible development of a strong El Niño event, which traders fear could disrupt weather patterns during the formation of Brazil’s 2027 crop.
Currency movements pressure regional producers
Exchange rates were not the main force behind Tuesday’s futures decline, but they remain important for physical-market pricing.
In Brazil, the combination of lower New York futures and a softer dollar against the real reduced support for domestic prices. Producers nevertheless remain cautious sellers, with many reportedly raising their targets toward R$2,000–R$2,100 per 60-kilogram bag after the recent futures rally.
The situation is also creating concern in Colombia. ANDI President Bruce Mac Master warned that the dollar’s decline against the Colombian peso has brought the exchange rate toward levels not seen since 2018. A stronger peso reduces the local-currency income received by exporters and makes Colombian products more expensive for international buyers. This could affect coffee, flowers, clothing and other export-oriented industries while simultaneously making imported goods more competitive in Colombia.