By: Editorial Team, StoneX Media
The coffee market is balancing two competing realities. Expectations for Brazil's largest coffee harvest on record have driven prices sharply lower, yet physical coffee inventories remain exceptionally tight across key consuming regions. That disconnect is delaying the market's transition from shortage to surplus and leaving traders highly sensitive to harvest progress, producer selling and logistics. As a result, nearby coffee prices continue to respond to immediate supply constraints rather than forecasts alone.
Leonardo Rossetti, StoneX Brazil Market Intelligence Analyst, closely monitors Brazil's coffee production, exports and producer behavior. His perspective combines on-the-ground knowledge of the Brazilian harvest with analysis of global supply flows, providing early insight into when expanding production is likely to reach international markets.
Coffee inventories remain the strongest source of support for nearby prices despite increasingly bearish production forecasts. Rossetti notes that "the physical market, it's still very tight" and adds that "stocks are very low in several consumer regions", including Europe, Japan and exchange warehouses. Importers continue competing for limited immediately available supplies while waiting for Brazil's harvest to reach export markets. This imbalance explains why futures have priced a surplus while physical premiums have remained comparatively resilient.
Brazil's record coffee harvest is unlikely to ease inventory shortages until late in the third quarter. Rossetti explains that "from August and September we typically see the highest flow of deliveries", adding that weather delays have slowed harvesting, drying and processing. He also observes that financially stronger growers "don't have this urgency to sell and can wait for better opportunities", reducing immediate market availability. As larger export volumes eventually arrive, inventories should begin rebuilding, although weather developments could quickly alter expectations for the following crop.
Physical coffee supplies remain tight because Brazil's harvest has been delayed, producer selling has been slower than normal and inventories across major consuming regions remain low.
According to Leonardo Rossetti, the strongest increase in deliveries is expected from late August through September, when harvested coffee has been fully processed and becomes available for export.
Yes. While the current market focuses on expanding supply, El Niño could shift attention back to production risks for Brazil and other major coffee-producing regions heading into the 2027 crop.
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--- Written by Frédéric Guetin, StoneX TV Producer
--- Expert: Leonardo Rossetti, StoneX Brazil Market Intelligence Analyst
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Coffee inventories remain unusually tight even as Brazil heads toward a record harvest and the largest global coffee surplus in years. The disconnect between physical availability and future supply expectations is creating a two-speed market that could keep volatility elevated through the second half of 2026.
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