Global coffee prices seen falling in 2026 as Brazil-led surplus emerges

The global coffee market is entering 2026 with a shift in direction. After several years of supply deficits and tight availability, forecasts now point to a production surplus led by Brazil, amid a macroeconomic environment marked by financial and trade risks.

The adjustment is unlikely to be linear. Price trends will depend on the pace at which Brazil’s new crop reaches the market, the positioning of investment funds in futures markets and political and currency stability in major producing countries.

The current landscape combines a softening physical market, changing export flows and demand that — despite recent inflationary pressure — remains resilient in key segments.

The most significant signal comes from the projected balance for the 2026/27 season, which is reshaping expectations formed during the recent period of scarcity.

Carlos Mera and Stephen Rannekleiv, analysts at Rabobank, say they continue to base their long-term outlook on “a much more comfortable balance for 2026/27, as increased Brazilian arabica production will translate into a significant global surplus,” a shift that is altering the outlook for investors and market participants.

Surplus outlook

The central projection for 2026/27 is driven by higher Brazilian production. According to Rabobank, global output could reach around 180 million bags for the first time, with an increase of 8 million bags year on year largely driven by Brazilian arabica.

Rainfall in several producing regions during 2026 has so far exceeded normal levels, reinforcing expectations for a larger crop.

StoneX shares a similar view. Analyst Fernando Maximiliano estimates that “Brazilian production will rise 13.5% to about 77 million bags,” with arabica output increasing from 36.5 million to 47.2 million bags, a gain of roughly 29%.

Under that scenario, the 2026 cycle would mark the first global coffee surplus in five years, following deficits between 2021 and 2024 and a balanced market in 2025.

Sucden Financial estimates a similar figure. Analysts Daria Efanova and Viktoria Kuszak project Brazil’s 2026/27 crop at about 72.5 million bags, including 47.5 million bags of arabica and 25 million bags of robusta.

That would push the global balance into a surplus of between 4.7 million and 5.3 million bags, assuming stable weather and adequate robusta supply.

However, the transition remains highly sensitive to climate conditions. In Brazil, regions such as southern Minas Gerais and Zona da Mata have experienced lower-than-expected rainfall and episodes of high temperatures. Recent years have also shown that the traditional biennial production cycle has become less predictable amid increasing climate variability.

Outside Brazil, additional production does little to change the global market’s reliance on the world’s largest producer. Sucden Financial notes that “Brazil remains the decisive driver of global balances,” while countries such as Colombia and Ethiopia add only marginal volumes.

In Colombia, climate pressure has already affected output. Germán Bahamón, head of the National Federation of Coffee Growers, said production in January fell 34%. Over the past 12 months, output totaled 13.2 million bags, an 8% decline.

Exports since the start of the coffee year in October have reached 4.2 million bags, down 10%, although total shipments over the past 12 months amounted to 12.89 million bags.

“Climate conditions, exchange rates and international price volatility continue to pressure Colombian coffee production, affecting the sector’s economic momentum at the end of 2025 and the start of 2026,” Bahamón said.

In January alone, Brazil recorded the seaborne shipment of 7,794 containers of coffee, according to newly released data from Datamar.

The following breakdown tracks the monthly outbound volumes of Brazilian coffee recorded since January 2023:

Coffee Exports | Jan 2023 – Jan 2026 | TEUs

Source: DataLiner (click here to request a demo)

Prices, funds and market dynamics

The anticipated shift in supply balances is already influencing market positioning. Rabobank notes that the market has moved into bearish territory after a sustained increase in coffee awaiting classification and strong export flows from Vietnam, Nicaragua and Honduras offset weaker Brazilian shipments early in the year.

According to the bank, “it is entirely possible that the pace of fund selling seen so far in 2026 has somewhat exaggerated the decline in prices, and a short-term rebound could occur,” although the broader structural trend still points to a downward trajectory.

Arabica coffee futures are currently trading at about 280 cents per pound, representing a year-to-date decline of 18.34%.

Bahamón said Colombia’s coffee sector has historically shown resilience.

“Even in challenging scenarios, the strength of its institutions, the discipline of its producers and the confidence of international markets remain the pillars supporting its global reputation,” he said.

Rabobank believes a return to a clear contango structure — when futures contracts for later delivery trade above near-term prices — is unlikely before December 2026, when larger volumes from Brazil’s new harvest begin arriving in destination markets.

Until then, the market is likely to go through a transition period in which expectations of future abundance coexist with still-constrained immediate availability.

For robusta coffee, the outlook carries additional nuances. Sucden Financial says the market for the variety “remains structurally tight at the start of 2026, although short-term supply flows have improved.”

Vietnam is expected to sell about 10 million bags from the new harvest, with roughly 16 million bags available for export in the coming months.

Demand for instant coffee and installed processing capacity in importing countries have helped sustain relative stability for robusta.

Speculative positioning reflects the shifting narrative. By mid-January, funds held a smaller net long position in arabica than the previous year, while gross short positions had increased by more than 10,000 contracts.

The risk of cross-liquidation across agricultural commodity markets adds a technical factor that could amplify price movements even when underlying fundamentals remain stable.

Demand remains resilient

On the demand side, consumption remains resilient, although with regional variations. In the United States, despite an 11.1% increase in retail prices for roasted and ground coffee in 2025, sales measured in dollars rose 10.1%, while volumes declined only 0.9%, indicating limited demand elasticity.

Rabobank notes that the U.S. market remained solid in 2025, supported by consumer trends related to health, energy and value-seeking behavior.

In Asia, China is gaining importance. Sucden Financial says the country is now among the ten largest importers of Brazilian coffee, with imports reaching about 1.1 million bags in 2025.

Per capita consumption remains well below that of mature markets, leaving room for expansion, though margins may be tighter for large retail chains.

Macroeconomic factors add further uncertainty. Sucden Financial says markets may be “overly optimistic” given the potential politicization of the U.S. Federal Reserve and the increasing risk of a weaker labor market.

The end of Federal Reserve Chair Jerome Powell’s term in May 2026 and the appointment process for a successor could increase volatility in interest rates and credit markets, while yield differentials between Brazil and the United States may influence the trajectory of Brazil’s currency.

On the trade front, the reversal of extraordinary 40% tariffs on Brazilian coffee in the United States removed a distortion that affected markets in 2025. However, the risk of new trade measures remains in an environment where tariffs are increasingly used as negotiating tools.

The stability of this front is crucial for exports to the world’s largest consumer market.

Overall, 2026 is shaping up as a turning point for the coffee market. If Brazil’s crop projections are realized and weather conditions remain favorable, the global market could shift from a cycle of scarcity to one of greater supply, putting downward pressure on prices as inventories rebuild.

The scale and pace of that adjustment will depend on producers’ selling discipline, fund activity and a macroeconomic environment that continues to amplify the market’s sensitivity to both climate events and political developments.

Source: Bloomberg Linea

Sharing is caring!