CoffeeNetwork (New York) - The latest wave of USDA Foreign Agricultural Service (FAS) attaché reports, released across April and May 2026, points to a global coffee market entering a transitional phase—one defined not by outright scarcity, but by uneven recovery and persistent production risk.
Across key producing regions, the data shows that supply is indeed expanding after several tight years. Yet the recovery is far from uniform. Instead, it is being shaped by diverging weather outcomes, structural constraints at origin, and a growing reliance on a narrower group of expansion-driven producers. It is important to note, however, that at the time of writing, the Brazilian report has not yet been released.
At a global level, the message is clear: the market is moving beyond the acute shortage narrative of recent seasons, but it has not yet reached stability.
Central America Drives Arabica Growth
Among the most notable developments in the latest reports is the strength of Central America, where countries such as Honduras and Guatemala are emerging as key contributors to incremental arabica supply.
Honduras stands out as the clearest growth story. The USDA projects production for the 2026/27 marketing year at roughly 6.03 million bags, an increase of around 9% year-on-year, driven by improved agronomic practices, expanded productive area, and maturing trees. Exports are expected to rise in parallel to approximately 5.5 million bags, reinforcing the country’s position as one of the world’s leading arabica exporters.
This expansion is not without risk. Coffee leaf rust incidence has ticked higher, and ending stocks are projected to build sharply as production outpaces domestic use. Still, Honduras is clearly becoming a central pillar in the global arabica balance.
Guatemala, meanwhile, presents a more measured but steady trajectory. Production is forecast at approximately 3.13 million bags, up around 3% year-on-year, supported by gradual expansion in harvested area and continued investment in plantation renovation.
The country’s emphasis remains firmly on quality. Arabica accounts for roughly 98% of production, and a growing share of planted area now consists of rust-resistant hybrids. Export volumes, projected at 2.88 million bags, further underline Guatemala’s importance as a high-quality supplier rather than a volume driver.
Together, these two origins highlight a broader trend: arabica supply growth in 2026 is increasingly concentrated in select, well-supported producing regions rather than broadly distributed across the global landscape.
Costa Rica’s coffee production is also expected to increase 3.5% to 1.2 million bags.
On the other hand, a decline of 8% is forecast for Nicaragua, with the country poised to produce 2.4 million bags due to the high probability of El Niño in the second half of 2026. .
Limited Upside Elsewhere in Latin America
Beyond Central America, the outlook is notably more constrained.
Mexico’s production is forecast to rise only marginally to around 4.1 million bags, supported by modest gains in robusta output and incremental improvements in farm management. Peru is expected to remain essentially flat at 4.78 million bags, with exports totaling roughly 4.55 million bags, underscoring the limited capacity for near-term expansion.
Peru's coffee production for marketing year (MY) 2026/2027 is estimated at 4.78 million 60-kg bags, practically unchanged from the previous year.
Colombia stands out amongst the rest with coffee production forecast to increase 7.2 percent to 13.4 million bags green bean equivalent (GBE), mainly due to favorable dry conditions
The implication is increasingly evident. While parts of Latin America are stabilizing or expanding, many origins are operating near structural limits, unable to significantly scale production despite relatively strong global prices.
Asia: Weather Disruptions Offset Global Gains
If Central America represents the upside, Asia—particularly Indonesia and India—illustrates the ongoing fragility of global supply.
Indonesia is expected to see one of the sharpest declines among major producers. The USDA forecasts 2026/27 production at approximately 11.38 million bags, down around 8% year-on-year, primarily due to excessive rainfall disrupting flowering and cherry development in key robusta regions across Sumatra and Java.
Flooding has also impacted arabica-growing areas, compounding the losses. While exports are still projected at around 7 million bags, the reduction in overall output is likely to tighten domestic supply and limit exportable surplus. [perfectdai...ygrind.com]
India presents a similarly complex picture. Production is forecast at roughly 6.14 million bags, with arabica yields declining by about 8% due to erratic weather patterns, including excessive rainfall followed by dry conditions.
At the same time, the country’s export outlook is supported by new trade agreements with the United Kingdom and European markets, which are expected to improve market access. Yet falling farmgate prices and ongoing climate volatility are weighing on producer margins. [bing.com]
Vietnam is improving coffee competitiveness by using high-quality coffee varieties and implementing traceability systems. The domestic market is gradually expanding, and strong export performance supports production growth. However, prices have declined from 2024-2025 peaks due to oversupply in the global market, and rising input costs are impacting coffee farmers' income. Farmers, traders and exporters have released stocks amid concerns about further price declines.
Marketing Year (MY) 2026/27 production is forecast to increase to 32.5 million bags GBE due to production expansion driven by 2024-2025 price peaks. Coffee exports are forecast to rise moderately, and domestic consumption continues to grow. Falling prices from recent peaks have prompted producers, traders and exporters to release stocks, supporting strong export performance.
Africa: Quiet Expansion, Structural Constraints
The latest USDA reports also provide a clearer view of Africa’s role in the evolving supply landscape, revealing a region that is expanding in parts but still constrained structurally.
Ethiopia continues to anchor the continent’s production outlook. The USDA forecasts 2026/27 output at approximately 12.1 million bags, up around 4–5% year-on-year, supported by improved yields and favorable weather conditions. Exports are projected at 7.13 million bags, with demand strengthening across both traditional European markets and emerging destinations such as China.
The trajectory positions Ethiopia to overtake Indonesia and reclaim its role as the world’s fourth-largest coffee producer, highlighting its growing structural importance in global supply.
Uganda, meanwhile, remains Africa’s largest exporter and a key robusta powerhouse. Production is expected to edge higher to roughly 7.2 million bags, with exports rising to about 6.8 million bags, supported by ongoing expansion in planted area and strong price incentives.
Unlike many origins, Uganda’s growth story is volume-driven, underpinned by smallholder expansion and continued investment in coffee cultivation.
In East Africa, both Kenya and Tanzania are showing signs of recovery, though from smaller bases.
Kenya’s production is forecast to rise to around 950,000 bags, with exports increasing nearly 12% to 940,000 bags, driven by new plantings entering production and government-backed sector revitalization programs.
Tanzania is expected to post one of the strongest growth rates in the region, with production rising more than 10% to approximately 1.6 million bags as rehabilitated plantations reach maturity and favorable weather supports yields. Exports are projected to increase modestly to around 1.4 million bags.
Taken together, Africa’s outlook reflects a dual dynamic: on one hand, steady growth in countries such as Ethiopia and Uganda; on the other, structural constraints—aging trees, limited inputs, and infrastructure gaps—continue to cap the region’s ability to scale as a major global supply driver.
Structural Shifts: Costs, Climate, and the Rise of Robusta
Across all regions, several themes emerge consistently from the USDA reports.
Weather volatility remains the dominant risk, with excessive rainfall, flooding, and drought concerns shaping production outcomes across multiple origins.
At the same time, supply growth is increasingly uneven, concentrated in specific countries while others stagnate or decline. This fragmentation is reshaping trade flows and increasing reliance on a narrower supply base.
Robusta continues to gain strategic importance, particularly as arabica production remains constrained and demand for soluble coffee expands. Countries such as Uganda, Vietnam, and Indonesia are central to this shift.
Meanwhile, cost pressures—including fertilizer, fuel, and labor—are weighing on producer margins globally, even as production volumes increase.
A Market Moving Toward Balance—But Not Stability
The latest USDA attaché reports suggest that the global coffee market is gradually transitioning toward a more balanced supply picture. Production is rising, exports are expanding in key regions, and the extreme tightness of previous seasons is beginning to ease.
Yet this recovery remains fragile.
Supply growth is uneven and concentrated, weather risks are intensifying, and structural constraints continue to limit expansion in many origins. The result is a market that may appear balanced on paper but remains highly sensitive to disruption.
In this sense, the defining feature of the 2026 outlook is not abundance—but uncertainty.
Alexis Rubinstein
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