Brazil's Record Coffee Harvest and Vietnam's Surge: Will Coffee Get Cheaper?

JAKARTA, CNBC Indonesia – Brazil is forecast to harvest its largest coffee crop and is ready to ship millions of additional bags to global markets from mid-year onwards. The world’s largest coffee producer is expected to record its highest-ever harvest in the 2026/2027 season, with export volumes projected to break new records from July onwards. Amid expectations of ample supply, markets remain uneasy. Industry players are now focusing on the El Niño weather phenomenon, which is being closely monitored due to its potential to disrupt the next growing season. Carlos Santana, director of EISA Brazil, a subsidiary of global commodities trader ECOM, said Brazilian green coffee exports could reach around 50 million 60kg bags in the new season, surpassing the previous record of 46.3 million bags recorded in 2024 according to CECAFE data. ‘The market is inverted. Current prices are higher than futures contracts, giving farmers an incentive to sell quickly,’ Santana told Reuters during a coffee conference in Santos, Brazil. The inverted market condition is prompting farmers to release stock more aggressively. Traders expect export flows to rise in July or August as Brazil’s harvest enters its peak phase. By May, EISA estimated that around 5% of the harvest had already been collected. The agency previously projected Brazil’s coffee production for 2026/2027 at 75.8 million bags, significantly higher than recent years and reinforcing the view that global coffee markets are moving towards a surplus. Other institutions have also revised their production estimates. Marex forecasts Brazil’s coffee production at 75.9 million bags, StoneX at 75.3 million, while Coffee Trading Academy anticipates a 12% annual increase to 71.4 million bags. Brazil’s production rise coincides with Vietnam also boosting global supply. The world’s largest robusta producer saw January-April 2026 coffee exports surge 15.8% year-on-year to 810,000 tonnes. Vietnam’s 2025/2026 production is forecast at 29.4 million bags, the highest in four years. Supply pressures caused global coffee prices to plummet sharply last month, with arabica contracts hitting a 1.5-year low earlier this week before rebounding. However, the price decline has not been linear. Markets have started buying coffee contracts again as El Niño risks enter traders’ radar. The US weather agency NOAA forecasts an 82% chance of El Niño developing between May and July, persisting through the year, with a 67% probability of a ‘Super El Niño’. Main concerns centre on Brazil’s coffee flowering phase, typically September to October. Delayed rainfall from El Niño could disrupt coffee blossom development and affect next season’s harvest potential. Conversely, warmer weather reduces frost risks, which have long been a major threat to Brazilian coffee plantations. Thus, markets are weighing whether El Niño’s impact will ultimately benefit or harm production. Santana said weather trends will dictate farmers’ selling strategies. If El Niño begins damaging crops, producers may hold off on sales and retain stocks longer. The global coffee market remains in a low-stock situation after years of production disruptions in major producing nations. Brazil is expected to act as a key balancer to replenish consumer stocks depleted by price surges. USDA Foreign Agricultural Service data projects global coffee production for 2025/2026 to reach a record 178.8 million bags, with robusta rising 10.9% and arabica falling 4.7%. Despite rising global supply, ending stocks are forecast to drop 5.4% to 20.1 million bags, indicating the coffee market remains far from oversupplied. Geopolitical factors further complicate price directions. Global shipping disruptions from the Strait of Hormuz closure have increased costs for freight, insurance, fertiliser, and fuel. These higher logistics expenses are now being factored into importers’ and roasters’ cost structures. The combination of Brazil’s production surplus, Vietnam’s export growth, El Niño threats, and global logistics pressures is driving the coffee market in two directions simultaneously. While supply appears ample on paper, sensitivity to weather and distribution keeps price volatility high.