Daily Coffee Market Report (4 Feb 2026): Improving Supply Outlook Weighs on Coffee Markets as Brazil Crop Prospects and Global Exports Rise

Coffee prices extended their decline in the latest session, building on the sharp futures-led sell-off seen earlier in the week. Arabica futures closed lower again, but the pace of losses slowed materially compared with the prior day’s liquidation, indicating that the market is transitioning from forced selling into consolidation. Intraday price action showed attempts to stabilise around the 309–310 level, even as prices remain firmly below key moving averages, confirming that short-term trend momentum is still negative.

Brazil’s coffee market has moved into a more defensive stance as expectations for a larger 2026/27 crop gain traction. According to Reuters, Itaú BBA estimates Brazil’s next coffee harvest at 69.3 million 60-kg bags, representing a 10.1% increase year on year. Arabica production is projected at 44.8 million bags, up 18%, while Robusta output is expected to reach 24.5 million bags. Improved rainfall levels and more moderate temperatures following last year’s weather disruptions are cited as key factors supporting the improved outlook.

Researchers at Cepea/ESALQ indicate that favourable weather conditions through much of January, combined with expectations for continued humidity in early February, should support grain filling during this critical stage of crop development. These conditions have helped stabilise expectations after earlier stress episodes and underpin forecasts for higher Arabica output in the 2026/27 season. Nevertheless, Cepea cautions that weather risk has not been eliminated. Late December was marked by periods of high temperatures and low humidity, conditions that could still impair bean formation and result in lighter or shrivelled beans if repeated.

The improving production outlook is already feeding through to domestic prices in Brazil. Between December 30 and January 30, the CEPEA/ESALQ indicator for type-6 Arabica coffee (hard to better quality), delivered in São Paulo, declined by R$ 80.19 per 60-kg bag, a fall of 3.7%, closing at R$ 2,094.55 per bag. The January 2026 average price of R$ 2,178.82 was the lowest monthly level since October 2025, signalling that expectations of greater supply availability are beginning to weigh on internal market sentiment.

At the global level, export data reinforce the perception of improving supply flows. Figures from the International Coffee Organization (ICO) show that worldwide coffee shipments reached 11.94 million bags in December, the third month of the 2025/26 crop year, marking a 10.45% increase compared with December 2024. Over the first three months of the current harvest, global exports totalled 33.76 million bags, up 5.5% year on year.

The composition of exports continues to shift. Over the 12 months ending in December, Arabica shipments declined by 1.1%, while Robusta exports rose by 8.8%, highlighting the growing contribution of Robusta to global supply growth. This trend reinforces substitution dynamics in consuming markets and adds further pressure to Arabica prices at a time when futures markets are already digesting a sharp liquidation phase.

Weather

The state of Rio Grande do Sul in Brazil remains under weather alerts from the Instituto Nacional de Meteorologia (Inmet) due to two simultaneous conditions: a dangerous heat wave and very low humidity levels. The heat wave, characterized by temperatures around **5 °C above normal is expected to continue until Saturday (07 Feb) and poses elevated health risks, especially for vulnerable groups. At the same time, low relative humidity (20–30 %) persists until Thursday evening, increasing discomfort, respiratory dryness, and the risk of fires across much of the state, including the Porto Alegre metro area and parts of neighboring states.

Futures Performance

Arabica Coffee (ICE – KC)

Robusta Coffee (ICE – RC)

Coffee futures extended losses on 04-Feb-2026, but the character of the move differed materially from the previous session. Following the sharp, curve-wide liquidation seen on 03-Feb, price action on 04-Feb reflected residual pressure rather than a renewed wave of aggressive selling. Both Arabica and Robusta closed lower versus 03-Feb, yet the magnitude of declines was significantly smaller, indicating that the bulk of forced long liquidation had already taken place.

In Arabica, the nearby Mar-26 contract continued to lead the downside, confirming that the market remains focused on unwinding front-end speculative length. However, the reduced rate of decline across deferred contracts suggests that selling intensity is diminishing rather than accelerating. The structure of the curve continues to point to positioning-driven weakness rather than a reassessment of physical supply and demand, as losses were relatively contained beyond the front months.

Robusta followed a similar trajectory, with uniform declines across the curve but no evidence of downside momentum building further. The consistency of losses between contracts supports the view that Robusta is being pulled lower by broader risk-off behaviour in soft commodities rather than Robusta-specific fundamentals. Importantly, volume concentration in the nearby months indicates ongoing position adjustment rather than the entry of new directional shorts.

Contango vs Backwardation

Across both Arabica and Robusta, the persistence of contango confirms that the coffee complex is not experiencing a supply squeeze. In past stress episodes, backwardation has emerged rapidly when roasters scramble for nearby coverage or when certified stocks become constrained. That dynamic is absent here. Instead, the curve behaviour is consistent with a market undergoing financial deleveraging while fundamentals remain broadly intact.

The widening of contango during the sell-off reinforces the interpretation that recent price action is not demand-led. Front-months are being sold hardest, flattening price levels downward without inverting the curve. This structure typically precedes a period of consolidation, as markets stabilise once speculative length has been sufficiently reduced.

Arabica/Robusta spread

Arabica $6,830 10MT
Robusta $3,747 10MT

Spread 44.72%

Volume & Open Interest

Arabica Coffee (KC)

Robusta Coffee (RC)

Arabica volumes expanded sharply into the sell-off, culminating in an exceptionally high 84,424 contracts traded on 04-Feb, the largest volume print in the period and well above recent averages. In the days leading up to this spike, open interest was still rising, reaching 179,573 on 03-Feb, which confirms that the initial phase of the move involved new position building and repositioning, not just position exit. The combination of rising open interest and rising volume ahead of the break suggests that speculative length was still being accumulated or rolled until the liquidation event forced a rapid unwind.

The volume surge on 03-Feb and 04-Feb marks a classic capitulation signature. Heavy volume following a sharp price decline typically signals forced liquidation rather than fresh directional conviction. The absence of published open interest for 04-Feb is critical; once released, a sharp drop in OI would confirm large-scale long liquidation, validating the interpretation that the market flushed excess length rather than transitioned into a structurally bearish regime.

Robusta shows a more restrained but still meaningful pattern. Volumes increased materially on 03-Feb to 50,591 contracts, coinciding with a decline in open interest from 80,118 to 79,091, which is a direct signal of net position reduction. This confirms that Robusta selling was driven more cleanly by position liquidation rather than new short initiation. The lower follow-through volume on 04-Feb reinforces the view that Robusta absorbed the shock more efficiently than Arabica.

Certified Inventory Stocks

Brazil – Customs Clearance Units (60-kg bags)

This shows how much coffee has been approved and prepared for export. It reflects intent to ship and pipeline buildup, not physical exports yet

Brazil – Issuance of Certificates of Origin (60-kg bags)

This shows how much coffee has actually cleared Brazilian customs and is therefore ready to leave the country. This is real, executable export flow.

If you notice any discrepancies in these figures or have extra information, please email hello@cocoaintel.com or leave a comment – corrections and additional insights are always welcome.