Daily Coffee Report 8/10/26
Daily coffee report
StoneX Coffee Team
- Coffee
Rabobank Signals Market Shift as Brazil Comeback Pushes Coffee Into Surplus Cycle
By: Alexis Rubinstein, Managing Editor - Coffee Network
CoffeeNetwork (New York) - The global coffee market is entering a decisive new phase, with Rabobank’s latest quarterly outlook reinforcing what is becoming an increasingly clear consensus: the era of tight supply is giving way to one of renewed abundance, led overwhelmingly by Brazil’s production recovery.
In its newly released Coffee Outlook Q2 2026, published June 3, Rabobank frames the transition succinctly—“from tight to light”—marking a structural shift in supply dynamics after several seasons defined by deficits, low inventories, and historically elevated prices.
At the center of this shift is Brazil. The world’s largest producer is expected to deliver a bumper crop in the 2026/27 cycle, supported by a favorable biennial “on-year,” improved weather conditions, and sustained investment following the high-price environment of 2024–2025. Rabobank estimates Brazilian production near 73 million bags, broadly in line with other trade forecasts that place the crop comfortably above prior records.
This resurgence is not occurring in isolation. The bank projects that global coffee production could climb to roughly 180 million bags, an unprecedented figure that underscores the scale of the supply expansion now unfolding. The result is a projected global surplus of between 7 and 10 million bags in the 2026/27 coffee year, a sharp turnaround after multiple consecutive seasons of deficit that had tightened availability and driven futures to extreme highs.
For market participants, this marks a turning point. The deficit cycle that dominated from 2021 through 2024 not only depleted inventories across consuming markets but also altered buying behavior, encouraging hand-to-mouth purchasing and amplifying price volatility. Rabobank’s outlook suggests those dynamics are now reversing. As surplus volumes emerge—particularly from Brazil—importing countries are expected to begin rebuilding stocks, easing the structural tightness that has defined the market in recent years.
The shift in fundamentals is already being reflected in price action. Coffee futures have trended lower in recent weeks, with arabica contracts falling to multi-month lows as the market increasingly prices in a looser supply outlook. Rabobank attributes much of the decline to these improving production prospects, although it emphasizes that speculative fund liquidation has likely amplified the move. In that context, the bank cautions that the recent selloff may have overshot underlying fundamentals, leaving room for short-term corrections should positioning stabilize.
Despite the emerging surplus, Rabobank stops short of calling for a sustained price collapse. Instead, the bank anticipates a normalization phase, with arabica prices expected to settle within a $2.50–$3.00 per pound range over the medium term. This reflects a balance between improving supply conditions and lingering structural risks, including climate variability and geopolitical disruptions that continue to shape agricultural markets more broadly.
Indeed, while the macro narrative has turned more bearish, the transition is unlikely to be smooth. Brazil’s production outlook remains highly sensitive to weather conditions throughout the harvest and beyond, particularly as attention begins to shift toward the next flowering cycle later in the year. More broadly, Rabobank underscores that agricultural markets are increasingly influenced by factors beyond traditional supply and demand, including currency volatility, logistics disruptions, and shifting trade policies.
Additional complexity comes from the wider supply landscape. Vietnam, the world’s largest robusta producer, is also contributing to improved global availability, reinforcing the broader rebalancing across both arabica and robusta markets. At the same time, inventories—while expected to rebuild—remain relatively tight by historical standards, leaving the market vulnerable to short-term shocks even as the longer-term balance improves.
Taken together, Rabobank’s latest outlook does not simply revise forecasts; it reframes the market narrative. After years in which scarcity defined pricing, sentiment, and strategy across the coffee supply chain, the industry is now confronting a fundamentally different environment—one characterized by growing supply, easing pressure on stocks, and a gradual return toward equilibrium.
Alexis Rubinstein
- Coffee
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