Daily Coffee Report 8/11/26
Daily coffee report
StoneX Coffee Team
- Coffee
Coffee Market Shifts Toward Surplus as Brazil Harvest Progress and Weather Risks Collide
By: Alexis Rubinstein, Managing Editor - Coffee Network
CoffeeNetwork (New York) - The global coffee market is entering a new phase of transition, as improving supply prospects—led by a record Brazilian crop—continue to pressure prices, even as short-term disruptions and structural tightness prevent a more pronounced collapse. Arabica futures are currently trading near 262 cents per pound, hovering around multi-month lows and down more than 20% year-on-year, underscoring the magnitude of the correction underway in 2026.
At the heart of the shift is a rapidly evolving supply outlook. The U.S. Department of Agriculture (USDA) has projected Brazil’s 2026/27 coffee production at approximately 71.9 million bags, a record level and a 14% increase over the prior season. This outlook has been reinforced by private analysts, with estimates trending even higher into the mid-70 million bag range, signaling that the world’s largest producer is set to flood the market with new supply over the coming months.
The implications are already being felt across the global balance sheet. Market participants are increasingly pricing in a return to surplus conditions after several years of tightness, with forecasts pointing to a global surplus in the range of 7 to 10 million bags for the 2026/27 season. This marks a decisive shift from the deficit-driven rally that propelled prices to historic highs in 2024 and early 2025.
However, the transition is proving far from linear. In the near term, weather developments in Brazil are injecting volatility into the market and complicating the bearish narrative. Persistent rainfall across key coffee-growing regions has slowed harvest progress and raised concerns over bean quality, triggering intermittent rallies driven by short covering in futures markets. While the broader trajectory remains anchored by the expectation of abundant supply, these disruptions highlight the fragility of the physical market during the peak harvest window.
At the same time, certified exchange inventories remain critically low, providing an important counterbalance to the otherwise bearish fundamentals. ICE arabica stocks have fallen to around 0.40–0.48 million bags, marking multi-month lows, while robusta inventories continue to hover near multi-year lows. This ongoing tightness in deliverable supply is preventing a sharper decline in prices, even as forward-looking indicators point to improving availability. The disconnect between current stock levels and anticipated production increases is a key feature of the market today, sustaining volatility and limiting downside momentum.
Developments in Vietnam are reinforcing the shift toward a more comfortable supply environment, particularly within the robusta segment. Export flows have strengthened notably, with shipments rising 7.9% year-on-year during the first five months of 2026, while production is expected to increase by approximately 6% to near 29 to 30 million bags. This expansion is contributing to a more balanced global market and is increasingly influencing blending dynamics, as roasters continue to optimize costs in response to still-elevated arabica prices.
In Brazil, export data from Cecafé confirms that the new crop is beginning to reach international markets. Shipments totaled 3.09 million bags in May, representing a 3.6% increase year-on-year, though export revenues declined by 16% over the same period due to lower prices. Despite the monthly increase, cumulative exports for the calendar year remain below 2025 levels, reflecting the transition between crop cycles and the delayed impact of the previous season’s tighter supplies. Looking ahead, the expected acceleration of shipments in the second half of the year is likely to reinforce downward pressure on both futures and physical differentials.
Beyond immediate supply considerations, the market is also beginning to reprice longer-term weather risks. The emergence of an El Niño pattern—potentially developing into a “Super El Niño” event—poses a significant threat to the next production cycle. Current estimates place the probability of such a development at approximately 67%, with the potential to disrupt flowering in Brazil later this year and impact yields across Asia. While these risks are not yet fully reflected in prices, they are acting as an important floor, preventing a more aggressive sell-off and keeping market participants cautious about forward positioning.
Data from the International Coffee Organization (ICO) further underscores the broader shift in market sentiment. The ICO composite indicator price averaged 256.05 cents per pound in May, declining 3.8% month-on-month as expectations of improved supply conditions gained traction. Arabica prices led the decline, particularly Brazilian Naturals, while robusta values showed relative resilience—reflecting diverging dynamics between the premium and commercial segments.
Taken together, the current market environment reflects a complex interplay of forces. Structurally, the outlook is increasingly bearish, driven by record production in Brazil and expanding supply from Vietnam. Yet the persistence of low inventories, weather-related disruptions during harvest, and looming climate risks are sustaining volatility and preventing a clean transition into surplus conditions.
For now, the coffee market appears firmly in a corrective phase, with prices adjusting to a fundamentally improved supply outlook after a prolonged period of scarcity. However, as history has repeatedly shown, the path from deficit to surplus is rarely straightforward. With weather uncertainty still elevated and inventories yet to rebuild, the market remains highly sensitive to both short-term shocks and longer-term risks—ensuring that volatility is likely to remain a defining feature in the months ahead.
Alexis Rubinstein
- Coffee
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Daily Coffee Report 8/10/26
Daily coffee report
StoneX Coffee Team
- Coffee
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