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WHASINGTON – Global coffee markets are entering a turbulent phase as prices continue to fall, driven largely by Brazil’s forecast of a bumper harvest.
Arabica futures, which peaked at over 440 US cents per pound in early 2025, have now retreated to around 273.90 US cents per pound a decline of more than 21 percent year-on-year.
Analysts warn that unless disrupted by extreme weather, the market could face a significant surplus in the months ahead.
Brazil’s Expanding Output
Brazil, the world’s largest coffee producer, has raised its 2026/27 production outlook to 66.7 million bags, an 18 percent increase from last season.
Of this, Arabica output is expected to reach 45.8 million bags, marking a 28 percent jump and the third-largest harvest on record.
Favorable weather conditions and the biennial cycle of coffee trees have contributed to this surge.
Rabobank analysts note that such growth could push the market into a large surplus, exerting downward pressure on prices.
Global Supply Dynamics
Arabica coffee, prized for its smoother flavor, accounts for roughly 75 percent of global production, with Brazil and Colombia leading output.
Robusta, which makes up the remaining 25 percent, is primarily cultivated in Vietnam and Indonesia.
Regional preferences shape demand: Arabica dominates consumption in the United States, while Robusta is favored in Europe for espresso blends.
Other key exporters include Peru, India, Uganda, Ethiopia, Mexico, and Côte d’Ivoire, each contributing to the global supply chain.
Despite the optimism surrounding Brazil’s harvest, coffee remains highly vulnerable to climate risks.
Droughts, frosts, and unexpected weather shifts can quickly disrupt supply.
Geopolitical tensions also add uncertainty, with analysts pointing to potential demand-side risks linked to global conflicts, including U.S. Israeli tensions with Iran.
While short-term rebounds in prices are possible, the long-term trajectory suggests continued volatility as supply outpaces demand.
Coffee’s decline contrasts sharply with gains in other agricultural commodities. Soybeans have risen 13.7 percent year-on-year, while wheat is up 16.8 percent.
Cocoa, however, has experienced a dramatic collapse, falling more than 55 percent, underscoring the volatility across global commodity markets.
Sugar prices have also dropped nearly 18 percent, reflecting broader shifts in agricultural trade.
Forecasts suggest coffee prices could fall further, with projections of 268.11 US cents per pound by the end of Q2 2026 and 240.31 US cents within 12 months.
For producers in Vietnam and Indonesia, the surplus threatens profit margins, while consumers worldwide may benefit from cheaper retail prices.
The next year will hinge on weather stability and geopolitical developments, both of which could alter the balance of supply and demand.
