Brazil expected to boost global coffee surplus in 2026/27, says Hedgepoint

 After years of tight global coffee supply, projections indicate the market could move toward a surplus in 2026/27. An expansion in Brazilian production, combined with more favorable weather conditions, may help rebuild stocks and influence price dynamics. 

For coffee, the analysis is led by Laleska Moda, the company's Market Intelligence analyst, who is responsible for monitoring supply and demand fundamentals and climate impacts on global production.

This year, Hedgepoint Global Markets projects a robust crop for the 26/27 cycle in Brazil, driven by timely rains in 2025 and the expansion of the production area. National arabica production could reach between 46.5 and 49 million bags, contributing to an expected global coffee surplus.

According to Laleska, the weather played a decisive role. "Despite the initial delay, the rains came at the right time to ensure consistent flowering. Even with irregular productivity, the total volume should be high and capable of helping to partially replenish global stocks, which are currently at very low levels," he says.

Domestic demand continues to favor the use of Conilon, given the price differential and the current arbitrage.

Conilon remains strong despite falling productivity

For Conilon/Robusta, although there is a natural reduction after the record crop of 25/26, the previous increase in area and the favorable climate should sustain high production. This should keep both domestic demand and exports firm.

Laleska reinforces that the scenario remains favorable for Robusta consumption globally.

"International stocks of Robusta remain tight, and arbitrage continues to encourage roasters to substitute Arabica. Brazil should continue to lead this supply," he explains.

International markets: suspended tariffs relieve some of the pressure on prices

The analyst points out that the recent suspension of tariffs on arabica coffee removes one of the main bullish factors seen at the end of 2025. This opens up space for US stocks to recover and could help increase ICE certified stocks.

"With the tariffs suspended, some of the pressure that had been sustaining prices has diminished. Now, the focus is almost entirely on the development of the Brazilian crop - the main risk factor and market driver in 2026," says Laleska.

Prices should continue to fall, but with high volatility

Even with the downward trend for arabica and robusta due to the probable oversupply, Hedgepoint warns that the market will continue to be volatile. Global stocks remain low, producers are selling at a slow pace and any climatic shock could quickly reverse the curve.

"We are in a scenario that suggests lower prices, but they are still extremely sensitive. Any change in supply, whether in Brazil, Colombia or Vietnam, could bring sudden movements to the market," explains the analyst.

More recently, increased tensions in the Middle East have also raised new doubts about supply. "With the Strait of Hormuz closed by Iran and conflicts ongoing, vessels are anchored in the Persian Gulf or redirected to other routes, while also avoiding the Suez Canal, a key point for the maritime coffee trade," points out Moda.

Climate risk remains on the radar: El Niño could affect 2026

Climate models from IRI and NOAA indicate a 50-60% chance of El Niño in the second half of 2026. The phenomenon could affect a variety of sources:

• Central America: risk of less rain and reduced hurricane activity

• Southeast Asia: possible losses in Vietnam and Indonesia

• Brazil: higher temperatures and greater humidity in winter, affecting harvest and post-harvest

  
  For Laleska Moda, climate risk is the element that raises the alarm about supply. "El Niño could alter productivity in key origins. Even with a good harvest in Brazil, the global balance will also depend on the weather in various producing regions."
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