Feb 12 / Laleska Moda

The bears have arrived: Arabica coffee prices already 12.9% down in 2026

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  • Arabica coffee futures have dropped sharply over the past two weeks, pressured by technical selloffs and expectations of a bumper Brazilian crop in the 2026/27 season.

  • The latest CFTC report highlights a shift in market sentiment, with speculative funds trimming their long positions.

  • Although the market rebounded slightly this week, supported by the March contract options expiry, the overall outlook remains bearish, with the May contract likely to test key support levels in the coming days.

  • Coffee-growing regions in Brazil have received abundant rainfall in early 2026, supporting the bean-filling phase and underpinning prospects for strong production in the next cycle. Many market participants are pointing to the possibility of a record crop.

  • The recent price drop has prompted selling activity in the Brazilian market. However, volumes remain limited. The latest export data also show declining shipments, reflecting reduced farmer selling over recent months.

The bears have arrived: Arabica coffee prices already 12.9% down in 2026

Arabica futures fell sharply in early 2026. The March and May contracts have accumulated a drop of, respectively, 16.1% and 12.9% from the beginning of the year until this Wednesday, February 12. Although prices were already in a bearish trend at the end of 2025 – due to improved weather in Brazil – the movement was intensified in the past weeks due to perspectives of abundant Brazilian supply, as the March contract broke through several support levels, triggering a technical selloff and falling below the 300 c/lb levels.
Prices have somewhat rebounded in the past two days, with March contract approaching 300 c/lb again and the May contract ranging from 295-97 c/lb levels, after finding support around 287-289 c/lb levels. This movement also reflected the option expiry for the March contract this Wednesday, 10. However, the overall picture in the market remains bearish and the rebound movement could show quick reversals in the next few weeks.
For instance, spread levels between the March-May contracts have significantly fallen in the past weeks, while the May-July spread has continued its downward trend (now at 3.8 c/lb). Although still positive, the decrease in spreads reflects easing concerns over supply in the medium term, as the harvest in Brazil approaches, with Arabica production set to recover in 26/27.

Robusta future prices have also followed a similar pattern , with prices still in a bearish trend but showing a short rebound. It’s also interesting to note that, for the variety, prices have also been supported by limited supply in Southeast Asia. While Indonesia is in its offseason, farmers in Vietnam are refraining from selling, driving differentials up (see our report). There is also the expectation of increased demand for this variety in 2026, as Robusta’s prices are more competitive than Arabica’s, with higher prices in past months expected to impact consumer habits in most destinations, such as US.

However, supply in the next few months tend to increase, with a good harvest expected in Brazil, which could pressure prices down in the medium term.

Arabica Future (2nd contract) and Fibonacci Retracements Levels (c/lb)  

Source: LSEG

Robusta Future (2nd contract) and Fibonacci Retracements Levels (USD/mt)  

Source: LSEG

Another point of attention is changes in speculative funds positions. The coffee market’s selloff intensified sharply in February, marking a clear acceleration of a correction that had been unfolding for months. While speculative investors had already been reducing long exposure amid growing expectations of improved global supply in 2026, the move became disorderly after Brazil’s crop outlook shifted decisively more bearish this year, as many companies are now pointing to a record crop in the country. Coffee-growing regions have received abundant rainfall since January, supporting the bean-filling phase and underpinning prospects for strong production in the next cycle. More recently, Conab (the Brazilian National Supply Company) reported a record crop of 66.2 M bags, and although their figures are typically below market projections, they still indicate a trend in Brazilian production.

Positioning data shows that February’s price decline was driven particularly by aggressive liquidation of existing longs. The latest CFTC Commitments of Traders report showed a sharp weekly drop in non commercial net long positions in ICE Arabica, as funds simultaneously exited longs and added shorts, one of the largest positioning adjustments in months.

In the physical market, the recent drop in Arabica and Robusta prices has also prompted selling activity in Brazil in early February. However, sales volumes remain limited, as farmers are well capitalized and are waiting for a clearer view of price direction. In this context, it is also important to highlight that lower farmer selling in recent months is still reflected in the country’s exports. According to Cecafé, total coffee exports reached 2.78 million bags in January, down 30.8% year over year. According to Márcio Ferreira, Cecafé’s president, falling prices and the depreciation of the U.S. dollar since the end of 2025 have contributed to this movement.

Arabica : CFTC Speculative Funds Net Positions (lots) 

Source: CFTC

Robusta : ICE Speculative Funds Net Positions (lots)

Source: ICE



In Summary

Arabica prices have come under strong pressure in early 2026, extending a bearish trend that began late last year amid improving weather conditions in Brazil. The decline accelerated as key technical levels were broken, triggering fund selling and reinforcing negative sentiment. Although prices have shown a brief rebound in recent sessions – partly linked to contract expiration dynamics – it is not clear that the recovery will be sustained in the next weeks. Falling spreads along the forward curve further indicate easing supply concerns as Brazil’s next harvest approaches and production prospects improve.

Robusta prices have followed a similar path, remaining under pressure despite a short term bounce. While near term supply constraints in Southeast Asia and expectations of stronger demand have offered some support, these factors could be outweighed by forecasts of increased supply in the coming months, particularly from Brazil.

The Arabica drop has been amplified by a sharp shift in speculative positioning, with funds aggressively liquidating long positions across the market. In the physical market, lower prices have encouraged some selling in Brazil, but volumes remain restrained as well capitalized farmers await clearer price signals, a dynamic that continues to weigh on export flows.

Weekly Report — Coffee

Written by Laleska Moda

laleska.moda@hedgepointglobal.com

Reviewed by Livea Coda
livea.coda@hedgepointglobal.com
www.hedgepointglobal.com

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