Coffee prices settled lower on Wednesday, with July arabica coffee (KCN26) closing down -1.85 (-0.68%) and July ICE robusta coffee (RMN26) falling -17 (-0.51%). The decline saw robusta coffee futures reach a one-month low, as expectations of a larger Brazilian coffee harvest continue to weigh on the market.
Brazilian Harvest Forecasts Boost Supply Outlook
The downward pressure on coffee prices is largely attributed to increasingly optimistic forecasts for Brazil’s upcoming coffee crop. Over the past month, coffee prices have been ratcheting lower, with arabica futures touching a 1.5-year nearest-futures low on Tuesday, driven by an improved global supply outlook. Several industry analysts have projected a significant increase in Brazil’s 2026/27 coffee harvest.
The Coffee Trading Academy, in a projection on May 7, anticipated Brazil’s 2026/27 coffee harvest to rise by 12% year-over-year, reaching 71.4 million bags. Earlier in the season, on March 19, Marex Group Plc had forecast a record-breaking 2026/27 Brazilian coffee crop of 75.9 million bags. This figure surpassed Sucafina’s estimate of 75.4 million bags, which represented a 15.5% year-over-year increase. StoneX also revised its Brazil 2026/27 coffee production estimate upwards on March 12 to a record 75.3 million bags, an increase from its November estimate of 70.7 million bags.
These upward revisions in Brazilian production estimates are contributing to a broader expectation of an expanded global coffee surplus. StoneX projected that the global coffee surplus for 2026 will grow to 10 million bags, a substantial increase from the 1.8 million bags anticipated for 2025, marking the largest surplus in six years.
Vietnam’s Exports Add to Bearish Sentiment for Robusta
Adding to the bearish sentiment, particularly for robusta coffee, are soaring export figures from Vietnam, the world’s largest producer of the variety. Data released on May 9 by Vietnam’s National Statistics Office indicated that Vietnam’s coffee exports for the period of January to April 2026 increased by 15.8% year-over-year, totaling 810,000 metric tons. This follows a strong performance in 2025, when Vietnam’s coffee exports jumped by 17.5% year-over-year to 1.58 million metric tons.
Furthermore, Vietnam’s 2025/26 coffee production is projected to climb by 6% year-over-year, reaching a four-year high of 1.76 million metric tons, which equates to approximately 29.4 million bags. This robust output from Vietnam is expected to exert additional downward pressure on robusta prices.
Inventory Levels and Geopolitical Factors Offer Support
Despite the bearish supply outlook, certain factors are providing some support to coffee prices. ICE coffee inventories have shown a declining trend over the past two months. Specifically, ICE robusta inventories fell to a two-year low of 3,631 lots last Friday, though they saw a slight recovery to a 2.5-week high of 3,845 lots on Wednesday. Concurrently, ICE arabica coffee inventories declined to a 2.75-month low of 456,462 bags on Wednesday.
Smaller export volumes from Brazil in April also offered some price support. Cecafe reported on Tuesday that Brazil’s green coffee exports for April decreased by 1.3% year-over-year to 2.76 million bags. This indicates a potential tightening of immediate supply from the world’s largest coffee producer.
The ongoing closure of the Strait of Hormuz continues to disrupt global coffee supplies, acting as a bullish factor for prices. This disruption has led to increased global shipping rates, higher insurance premiums, and elevated costs for fertilizers and fuel. These increased operational expenses for coffee importers and roasters contribute to a tighter supply chain and can support higher prices.
However, broader global export data presents a mixed picture. The International Coffee Organization (ICO) reported on November 7 that global coffee exports for the current marketing year (October-September) experienced a slight decline of 0.3% year-over-year, totaling 138.658 million bags. This suggests that while specific regions might be seeing increased output, overall global export volumes have faced headwinds.
USDA Projections for 2025/26
Looking ahead, the USDA’s Foreign Agriculture Service (FAS) provided its bi-annual report on December 18, projecting an increase in world coffee production for 2025/26. The FAS forecasted a 2.0% year-over-year rise to a record 178.848 million bags. This overall increase is expected to be driven by a significant surge in robusta production, projected to climb by 10.9% to 83.333 million bags, while arabica production is anticipated to decrease by 4.7% to 95.515 million bags.
Within this global forecast, the FAS specifically projected Brazil’s 2025/26 coffee production to decline by 3.1% year-over-year to 63 million bags. Conversely, Vietnam’s output is expected to rise by 6.2% year-over-year to a four-year high of 30.8 million bags. The FAS also forecasts that global ending stocks for 2025/26 will fall by 5.4% to 20.148 million bags, down from 21.307 million bags in 2024/25, indicating a tightening of overall inventory levels despite increased production.
The interplay of robust Brazilian crop prospects, strong Vietnamese exports, and ongoing geopolitical supply chain disruptions continues to shape the coffee market, with current price movements reflecting the market’s anticipation of ample supply from key producing regions.
