Global coffee production is expected to reach an all-time high in the 2026/27 season, but historically constrained inventories and uncertainty surrounding Brazil’s harvest are likely to prevent the market from moving into a comfortable surplus.

The U.S. Department of Agriculture projects global coffee output at a record 189.7 million 60-kilogram bags, supported by improved crops in Brazil, Vietnam, Ethiopia and Uganda. World consumption is also forecast to set a record, reaching 179.7 million bags, as demand continues to expand and roasters in the United States and Europe rebuild inventories after several years of restricted supply.

The projected production increase should allow global ending stocks to recover for a second consecutive season, reaching 26.3 million bags in 2026/27. That would represent a substantial improvement from the historically low level of 15.5 million bags recorded in 2024/25, although inventories would remain below their long-term average.

Global coffee exports are forecast to exceed 131 million bags in 2026/27, which would also be a record. Nevertheless, the USDA cautioned that overall market conditions will continue to depend heavily on Brazil’s production cycle.

That dependence was evident in futures trading on Wednesday, when coffee prices declined on both sides of the Atlantic as the advancing Brazilian harvest increased the availability of new-crop supply.

On ICE Futures US, the September 2026 arabica contract closed at 324.55 cents per pound, down 400 points, or 4 cents. The December contract settled at 309.45 cents per pound, a decline of 445 points.

In London, the September 2026 robusta contract ended at $3,818 per metric ton, down $22, while November robusta closed at $3,799 per ton, a loss of $38.

The arabica session was volatile. Technical and speculative selling intensified as market participants assessed the arrival of coffee from Brazil’s main producing regions. The weaker U.S. dollar against the Brazilian real did not provide sufficient support to reverse the downward movement.

Near-term pressure is being generated by expectations for a large Brazilian crop and the seasonal increase in producer selling. However, the progress of fieldwork remains considerably slower than it was last year, limiting confidence in the size and quality of the crop.

Cooxupé, the world’s largest coffee cooperative, reported that harvesting in its operating area had reached 47.3% by July 17. Although this represented an increase of 16.4 percentage points from the previous week, it remained well below the 68.4% harvested at the same stage of 2025.

Harvest progress reached 54% in southern Minas Gerais, 48% in São Paulo’s producing areas, 45% in Matas de Minas and 36.6% in the Cerrado Mineiro. Cooxupé operates across more than 370 municipalities and serves over 22,000 coffee-growing families.

Rains during June and early July delayed harvesting and created concerns about fruit losses, bean quality and processing yields. Traders are also monitoring the potential effects of El Niño on weather conditions ahead of the next flowering period.

The delayed harvest itself is not necessarily considered a major production risk. More important will be the consequences of the rainfall that caused the delays, including premature fruit drop and possible deterioration in cup quality. A clearer assessment is expected as larger volumes of coffee reach warehouses and undergo processing.

Brazil’s export figures also illustrate the tension between limited availability and historically elevated prices. According to the Brazilian Coffee Exporters Council, Cecafé, the country exported 38.46 million bags during the 2025/26 crop year, from July 2025 through June 2026. That was 15.7% below the 45.62 million bags shipped in the previous season.

Despite the sharp decline in volume, export revenue was almost unchanged at $14.6 billion, compared with $14.7 billion in 2024/25. Researchers at Cepea said restricted global inventories kept international and domestic coffee prices at high levels, largely compensating exporters for the reduced quantity shipped.

The slower export pace continued into July. By July 17, Brazil had shipped approximately 1.08 million bags during the month, down 11% based on the average daily pace. The total comprised 771,521 bags of arabica, 164,104 bags of robusta and 148,363 bags of soluble coffee.

While Brazil’s new crop is creating immediate pressure on futures, export performance elsewhere demonstrates that elevated international prices continue to support producer revenues.

In El Salvador, coffee export earnings during the first eight months of the 2025/26 cycle reached $141.36 million, an increase of 27.9% from the same period a year earlier, according to the Salvadoran Coffee Institute.

Export volume rose to 445,884 quintals from 399,704 quintals during the comparable period. Green coffee accounted for more than $136.91 million in revenue, while soluble coffee generated approximately $2.8 million and roasted coffee contributed $1.62 million.

North America remained the principal destination for Salvadoran coffee, purchasing 66.7% of exported volume. Europe accounted for 18.4%, while Asia received 3.6%.

The improvement comes despite the long-term challenges facing El Salvador’s coffee sector, including coffee leaf rust, changing weather patterns and a significant decline in national production since the 2013/14 cycle. Coffee nevertheless remains the country’s most important agricultural export.

For the international market, the fundamental picture is becoming more balanced but remains sensitive to disruptions. Record global output and the arrival of Brazil’s crop provide a bearish influence, particularly during the peak harvesting and marketing period. At the same time, low inventories, delays in Brazilian fieldwork and uncertainty over bean quality and future flowering continue to restrict the scope for a sustained decline.

Technical levels are also likely to influence short-term trading. For September arabica, support has been identified around 316.77, 311.43 and 302.12 cents per pound. Resistance is seen near 331.42, 340.73 and 346.07 cents.

The 300-cent level remains an important psychological and technical base. As long as prices remain above that area, the market may continue to attract buying interest during sharp declines. However, the direction of coffee prices over the coming weeks will depend increasingly on the quantity and quality of Brazil’s harvested crop and on whether the expected global recovery is large enough to rebuild stocks without weakening producer returns.