Coffee Fundamentals Remain Loose as Demand Begins to Crack

Commodities view: Coffee prices have been volatile and changed direction over the last 6 months several times, while Brazilian exports have remained exceptionally strong. We expect Arabica prices at $2.50/lb (-12% vs spot) over the next three months and $2.25/lb (-21% vs spot) in 12 months. In this report, we evaluate regional supply dynamics in the context of a strengthening El Nino. According to the latest NOAA, El Nino continues to strengthen, with a strong event likely persistent through January-March 2027, suggesting weather risks across key coffee-producing regions warrant close monitoring. A strong El Nino remains the principal weather risk to the global coffee balance; the risk is currently concentrated in Central America and, to a lesser extent, Colombia. Vietnam's crop conditions remain favorable and Brazil's outlook has improved following recent rainfall. We remain bearish on coffee and believe the market is approaching a tipping point. Exports from Brazil have been exceptio