Coffee Prices Dip After USDA's Forecast for 6% Increase in Global Coffee Production – CoffeeTalk

September arabica coffee (KCU26) has decreased by -7.05 points (-2.23%), while September ICE robusta coffee (RMU26) has dropped by -86 points (-2.27%). This decline in coffee prices follows the USDA’s late Wednesday forecast indicating a +6.0% rise in global coffee output for the 2026-27 season, totaling a record 189.7 million bags, driven primarily by improved growing conditions in Brazil. The USDA anticipates a +12% year-on-year increase in global arabica production, though robusta production is expected to decline by -0.7% year-on-year. Additionally, world ending stocks are projected to increase by +1.9 million bags to 26.3 million bags. Brazil’s coffee crop for 2026/27 is anticipated to be a record 71.9 million bags, up +14% year-on-year.

Currently, coffee prices are pressured by the expectation of drier conditions in Brazil’s coffee-growing regions, which could help expedite the coffee harvest. Nonetheless, the current harvest pace remains slow, slowing prices in the market. As of July 17, the Cooxupe co-op’s coffee harvest was 47.3% complete, lagging behind last year’s pace of 59%. Safras & Mercado has reported that Brazil’s harvest was 64% complete as of July 15, a decline from last year’s 77% and the five-year average of 70%.

On the robusta front, rising inventories are exerting downward pressure. ICE robusta inventories have surged to a four-month high of 4,254 lots as of Wednesday, an increase from the 2.25-year low of 3.631 lots reported on May 15. Conversely, ICE arabica coffee inventories decreased to a 2.25-year low of 320,615 bags.

Concerns over the El Niño weather phenomenon potentially jeopardizing Brazil’s coffee production next year are contributing bullish sentiment. Trader Commercial has noted that the El Niño may cause delays in rains critical to tree flowering in September and October, thereby affecting the 2026/27 crop. The US Climate Prediction Center has indicated that this emerging El Niño pattern is likely to be one of the strongest in over 75 years, implying possible severe weather disruptions that could impact coffee production in both Asia and South America.

Recent reports from Somar Meteorologia show that only 0.2 mm of rain—20% of the historical average—fell in the week ending July 19 in Minas Gerais, Brazil’s leading coffee-growing region.

Lastly, a significant increase in coffee exports from Vietnam, the largest robusta producer globally, is projected to negatively impact robusta prices. The National Statistics Office of Vietnam announced that the country’s coffee exports for the first half of 2026 increased by +7.3% year-on-year to 1.05 million metric tons (MMT). The exports for 2025 saw a dramatic increase of +17.5% year-on-year to 1.58 MMT. Production for 2025/26 is expected to rise by +6% year-on-year, reaching a four-year high of 1.76 MMT (29.4 million bags).

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