Daily Coffee Report 8/12/26
Daily coffee report
StoneX Coffee Team
- Coffee
Prices Slide as Brazil Harvest Accelerates and Supply Narrative Shifts
By: Alexis Rubinstein, Managing Editor - Coffee Network
CoffeeNetwork (New York) - The global coffee market has entered a decisive correction phase in early June 2026, with prices weakening sharply as traders increasingly price in a significant improvement in supply led by Brazil. After two years defined by tight availability and record-high prices, the market is now shifting toward a more balanced—though still volatile—supply environment.
Futures markets reflect this transition clearly. Arabica prices on ICE New York are trading near 259–262 cents per pound, hovering around their lowest levels since late 2024, while both arabica and robusta contracts have posted consistent declines over recent sessions. Over the past month alone, arabica has fallen more than 8%, with year-on-year losses exceeding 20%, signaling a broad repricing of supply risk.
At the center of the market’s shift is Brazil, where the 2026 harvest is now underway and increasingly shaping global sentiment.
The latest estimates from CONAB place Brazil’s 2026 coffee crop at approximately 66.7 million bags, an 18% increase year-on-year and the largest harvest on record. Arabica production is expected to rise sharply to 45.8 million bags, up nearly 28%, reflecting a strong positive biennial cycle and favorable weather conditions.
This surge in production is arriving just as harvesting activity accelerates. After intermittent delays caused by rainfall in late May, drier weather has improved field conditions, allowing picking operations to resume across key producing regions.
While localized weather events—including hail in parts of Minas Gerais—have raised short-term concerns about quality, the damage appears limited in scope and insufficient to materially alter the broader supply outlook.
The implication for the market is significant. Traders are increasingly confident that Brazil will deliver a large influx of coffee over the coming months, reinforcing expectations of improved global availability.
Beyond Brazil, the broader supply picture is also turning more favorable.
Vietnam, the world’s largest robusta producer, is forecast to increase production to approximately 32.5 million bags in the 2026/27 marketing year, supported by expanding cultivation and the maturation of replanted areas, according to the latest USDA attache report.
Export activity has already reflected this improved supply environment. In the first four months of 2026, Vietnam’s coffee shipments rose by roughly 15–16% year-on-year, underscoring the return of strong export flows into global markets.
Taken together, rising production in Brazil and Vietnam is reshaping expectations for the global balance sheet. Market participants now anticipate a meaningful increase in world supply for the 2026/27 cycle, with some forecasts pointing to growth approaching 10% year-on-year.
This shift has prompted a reassessment of price risk, with supply prospects now outweighing concerns related to logistics, geopolitics, and production volatility.
One of the most defining features of the current market environment is the divergence between physical trade flows and price performance.
While export volumes are expanding, export values are declining. Vietnam provides a clear example of this dynamic: despite a sharp increase in shipment volumes, export revenues have fallen due to lower global prices.
This trend reflects a normalization of the market following the supply-tight conditions of 2024 and 2025. As additional coffee becomes available, price premiums are eroding, and the market is transitioning toward a more volume-driven structure.
For producers and exporters, this shift introduces new challenges. Higher output does not necessarily translate into higher income, particularly as input costs—including fertilizers and logistics—remain elevated across many origins.
In parallel with fundamental developments, the futures market is reinforcing the bearish narrative.
Arabica prices have entered a sustained downward trend, with recent sessions marked by new lows for the current move. Selling pressure has been driven in part by improved weather forecasts in Brazil, as well as expectations that any harvest delays will prove temporary.
Positioning dynamics also appear to be playing a role. The current price action suggests a combination of fund liquidation and reduced risk premium, as traders adjust to the prospect of higher supply in the months ahead.
Despite the current downward trajectory, the coffee market remains highly sensitive to disruption, and several underlying risks continue to shape the outlook.
Weather remains the most critical variable. While Brazil’s crop prospects are currently favorable, the market remains exposed to volatility during the harvest and post-harvest phases, particularly with regard to quality and logistical execution.
At the same time, forecasts pointing to a potential El Niño development later in 2026 could introduce renewed uncertainty across multiple producing regions, including Central America and parts of Asia.
Geopolitical and logistical concerns also persist. Elevated energy costs and ongoing shipping disruptions continue to influence trade flows and cost structures, even as supply improves.
Crucially, global stocks remain relatively tight following consecutive deficit years, meaning that while supply is increasing, the system has limited buffer against unexpected shocks.
The current phase in the coffee market can best be described as a correction rather than a collapse.
The sharp decline in prices reflects a fundamental shift in expectations—from scarcity to improving availability—but does not indicate a return to surplus conditions of the past. Instead, the market is entering a more balanced but still fragile state.
Supply is increasing, particularly from Brazil, but it remains uneven and vulnerable to weather disruption. Demand continues to grow, albeit at a more moderate pace amid high retail prices and broader macroeconomic uncertainty.
As of early June 2026, the coffee market is being driven by a clear and dominant narrative: the arrival of a large Brazilian crop and the broader recovery in global supply.
Prices have adjusted quickly to reflect this shift, falling to multi-month lows as traders anticipate increased availability in the months ahead. Yet the market remains structurally complex, with risks tied to weather, logistics, and inventories still firmly in place.
What emerges is a market in transition—moving away from the extreme tightness of recent years, but not yet settled into a stable equilibrium.
Alexis Rubinstein
- Coffee
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