Coffee prices retreated on Tuesday, with both arabica and robusta futures settling lower. May arabica coffee (KCK26) closed down -3.20 (-1.10%), while May ICE robusta coffee (RMK26) fell -25 (-0.72%). The decline saw arabica coffee prices hit a seven-week low, primarily driven by burgeoning expectations of a record-breaking coffee crop in Brazil.
Brazilian Harvest Expectations Weigh on Market
Analysts are projecting a substantial harvest from Brazil for the 2026/27 season, a factor that is significantly pressuring coffee prices. Marex Group Plc, in a March 19 report, forecast a record Brazilian coffee crop of 75.9 million bags, a figure that surpasses Sucafina’s projection of 75.4 million bags and represents a notable year-over-year increase of 15.5%. Further bolstering this outlook, StoneX revised its Brazil 2026/27 coffee production estimate upwards on March 12 to a record 75.3 million bags, an increase from its earlier November estimate of 70.7 million bags.
These optimistic production forecasts are contributing to an anticipated expansion of the global coffee surplus. StoneX projected that the global coffee surplus will grow to 10 million bags in 2025/26, a significant jump from the 1.8 million bags recorded in 2025, marking the largest surplus in six years. This anticipated abundance of supply is a key bearish indicator for the market.
Vietnam’s Strong Exports Add to Bearish Sentiment
Adding to the downward pressure on robusta prices are soaring coffee exports from Vietnam, the world’s leading producer of this variety. Data from Vietnam’s National Statistics Office revealed that coffee exports for the first quarter of 2026 (January-March) increased by 14% year-over-year, reaching 585,000 metric tons. This follows a robust performance in 2025, where 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 expected to climb by 6% year-over-year to a four-year high of 1.76 million metric tons, equivalent to approximately 29.4 million bags. This sustained high level of production and export activity from a major global supplier contributes to the bearish outlook for robusta coffee.
Supply Disruptions Offer Limited Support
While the overall supply picture points to lower prices, certain factors are providing some limited support, particularly for robusta. Signs of tighter supplies were evident as ICE robusta inventories fell to a 16-month low of 3,788 lots on Monday. Additionally, the closure of the Strait of Hormuz, a critical shipping lane, has had a bullish effect on coffee prices by tightening global supplies. This disruption has led to increased global shipping rates, insurance premiums, and fuel costs, thereby raising expenses for coffee importers and roasters.
Smaller export volumes from Brazil are also providing a degree of support for coffee prices. Recent data from Cecafe indicated that Brazil’s green coffee exports in March decreased by 10% year-over-year to 2.65 million bags. The Brazilian Trade Ministry further reported a more significant drop in Brazil’s March coffee exports, which fell by 31% year-over-year to 151,000 metric tons.
Concerns over below-average rainfall in key Brazilian coffee-growing regions, particularly Minas Gerais, the largest arabica-producing area, could potentially curb future yields. Minas Gerais received only 4.2 mm of rain last week, a mere 20% of the historical average, according to Somar Meteorologia. This weather-related uncertainty is viewed as a bullish factor for prices.
Broader Market Data and Forecasts
Looking at broader market data, 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 figure, however, is contrasted by the U.S. Department of Agriculture’s Foreign Agriculture Service (FAS) bi-annual report released on December 18. The FAS projected that world coffee production in 2025/26 would increase by 2.0% year-over-year to a record 178.848 million bags.
Within this projected global increase, the FAS anticipates a 4.7% decrease in arabica production to 95.515 million bags, while robusta production is expected to rise by 10.9% to 83.333 million bags. The FAS also forecasted a decline in Brazil’s 2025/26 coffee production by 3.1% year-over-year to 63 million bags, with Vietnam’s output set to rise by 6.2% to a four-year high of 30.8 million bags. Consequently, 2025/26 ending stocks are forecasted to fall by 5.4% to 20.148 million bags from 21.307 million bags in 2024/25.
The confluence of robust production forecasts, particularly from Brazil and Vietnam, alongside strong export figures from Vietnam, is creating a bearish environment for coffee prices. While localized supply disruptions and weather concerns offer some temporary respite, the overarching sentiment points towards ample supply in the coming months, likely keeping prices under pressure.
