Porto Alegre, August 27th 2026 – After setting new highs for the December/26 contract, coffee prices eventually pulled back. Even so, the market is still holding a large portion of the gains from the rally that began in June and maintains a positive trajectory in the New York market. The fact is that, despite the advance of the Brazilian crop, with harvesting already entering its final stretch, physical stocks in the main consuming destinations remain low. This scenario is particularly reflected in certified stocks on the New York exchange, which continue to decline. In practice, coffee from Brazil’s new crop has still not reached important markets such as Europe and the United States in significant volumes.
This situation keeps concerns over supply in place. With the end of summer in the Northern Hemisphere approaching and the period of stronger consumption arriving with the colder season, the need to rebuild stocks increases. As long as Brazilian coffee does not reach destination markets in greater volumes, this perception of tight supply helps sustain prices at elevated levels.
Funds increase long positions while certified stocks continue to decline
On the New York exchange, funds once again increased their net long position in coffee futures, seeking protection against supply-related risks. The latest CFTC (Commodity Futures Trading Commission) COT report showed a net long position of more than 30 thousand contracts. The shift in positioning is noteworthy, since at the beginning of June, with the arrival of the Brazilian crop, these participants held just over 6 thousand net long contracts. The signal at the time was negative, based on expectations of improved supply with the arrival of Brazil’s new crop. The sharp rebuilding of long positions shows how much this expectation has changed over the past few months.
At the same time, certified coffee stocks on the New York exchange continue to decline, falling to 225 thousand bags at the close of trading on August 25. This makes coffee trading on the exchange much more vulnerable and market participants more sensitive to any supply-related noise. This environment increases the need for protection, amplifying reactions to supply problems and helping explain both resistance to declines and sharp upward movements, as well as the high volatility in New York. Strong financial flows into commodities also end up influencing market dynamics, adding further momentum to price movements.
Finally, the acceleration of coffee flows directly to roasters, shortening some stages of the marketing chain, has also contributed to lower warehouse stocks. This movement reinforces the perception of limited immediate availability and, above all, a lack of coffee reserves throughout the supply chain.
Robusta rises in London but remains relatively weaker than arabica
Robusta is benefiting from the rise in arabica but continues to lag behind. Improved global supply flows and rising certified stocks in London have reduced perceptions of tight supply. The strong pace of Brazilian shipments, the arrival of the Indonesian crop and the excellent performance of Vietnamese exports in the first months of the year reinforce this scenario.
Brazilian physical market remains disconnected from NY despite higher prices
In the Brazilian physical market, the combination of gains in futures prices and a firmer dollar is providing support to coffee prices paid to producers. Good-cup arabica is once again approaching R$ 1,900, trading in southern Minas Gerais at R$ 1,860 per 60-kg bag (US$ 362/bag), but it still has not reached the R$ 2,000 level (US$ 389) expected by many producers. Meanwhile, type 7/8 conilon in Espírito Santo rose to R$ 1,030 per bag (US$ 200/bag), still below the R$ 1,100 per bag (US$ 214) projected by producers.
The fact is that the Brazilian physical market has not followed exchange gains in the same proportion. Part of this disconnect is explained by weaker differentials in the export market. The basis, which is the difference between the exchange reference and the FOB price at the Port of Santos, remains under pressure, absorbing part of the gains on the exchange and limiting their transmission to the Brazilian physical market.
Producers continue to take advantage of price rallies, pacing their sales. On the buying side, there is greater participation and, at times, even aggressive activity from isolated players, mainly to cover positions already assumed. Although they recognize the problems observed in the Brazilian crop, particularly regarding cup quality, they continue to work with a scenario of a large crop. In addition, they believe the exchanges are financially overinflated, which helps explain the negative disconnect between the physical market and the exchange reference.
Shipments and flowering come onto the radar
The expectation is that Brazilian arabica shipments will gain greater momentum starting in September, allowing the new crop to begin appearing more significantly in the main consuming destinations. This increase in flow could bring some relief to the market and open room for price adjustments. At the same time, with harvesting entering its final stretch, attention should gradually shift to flowering and the first signs of Brazil’s 2027 crop.
With El Niño gaining intensity, weather should continue to exert a strong influence on the market. Any irregularity in rainfall during flowering and, especially, in the post-flowering period could quickly add a risk premium to prices.
For this reason, the market should continue alternating between downward corrections as supply increases and renewed rallies amid weather risks. The advance of El Niño further intensifies this weather-related stress, both in actual terms and through market noise. In any case, there is room for weather-driven volatility. For producers, the current environment requires close attention to opportunities, maintaining a staggered sales strategy and avoiding excessive concentration of commercialization, leaving room for new opportunities at higher prices.
Brazilian Arabica Differentials Under Pressure in the FOB Export Market
Brazilian arabica differentials remain weak in August, consolidating a movement that gained momentum from June onward in response to the rally in New York prices. This behavior partly reflects pressure from the arrival of the Brazilian crop, which, despite delays and problems related to cup quality, is still expected to be large. At the same time, inflated coffee prices in New York and greater selling presence in Brazil are weighing on the export basis.
Brazil Good Cup 3/4 MTGB is indicated at 32 cents per pound below the December/26 New York contract, FOB Santos. The export basis therefore consolidates the decline observed in July, moving in the opposite direction from the appreciation on the New York exchange. The current differential is well below the references of 2024 and 2025 and also below the five-year average for August (-20.60 cents).
An important point, however, is that this weakening is not occurring uniformly. Higher-quality arabicas, such as large-screen Fine coffees and semi-washed coffees (Brazilian pulped natural), are showing stronger differentials than in the same period last year. Lower availability of these descriptions, affected by excess moisture and accelerated ripening, is supporting their premiums.
At the other end, lower-cup-quality arabicas, such as rio and riada coffees, as well as smaller-screen coffees such as Grinders, are showing much more pressured differentials than in the same period of 2025. Greater availability of these coffees is increasing discounts and reinforcing market segmentation by quality.
