Episode #51
CropGPT - Coffee - Week 40
Global Coffee Market Summary: Brazil remains the central supply story. USDA projects 2026/27 production at a record 71.9 million bags, while StoneX forecasts an even higher 77.2 million bags. CONAB has also raised its 2026 estimate to 67.6 million bags, supported by a projected 34.8% increase in Arabica production to 48.91 million bags. Robusta production, however, is expected to decline 6.6% to 19.39 million bags. Exports remain strong, with August shipments reaching 4.155 million bags, up 31% year on year, while Brazil's Trade Ministry reported a 44.6% increase in August coffee exports. Weather remains a key variable for Brazil's next crop. Rainfall has generally been supportive of flowering, although heat risks in Espirito Santo and uneven conditions in other regions could affect development. Quality is a more persistent concern, with reduced availability of exchange-grade coffee pushing up premiums. Producers are also facing tighter margins as the coffee-to-fertilizer exchange ratio deteriorates, while warehouse capacity constraints and the growing threat of coffee berry borer add pressure to the supply chain. Vietnam continues to support global Robusta availability, with 2025/26 production forecast to rise 6% to a four-year high of 1.76 million tonnes. Exports from January through August increased 13.7% year on year, although export prices have fallen sharply. Favorable rainfall and soil moisture are supporting cherry development as the harvest approaches, leaving Vietnam with relatively low weather risk. Other major origins face more significant challenges. Colombia's output has fallen approximately 17% to 12.4 million bags, while an earthquake in key growing regions and disruptions around Buenaventura have added supply concerns. Indonesia currently carries the highest weather risk among major producers, with worsening drought in southern Sumatra threatening flowering and crop development. Ethiopia also faces medium weather risk as low rainfall and high temperatures threaten cherry size, weight, and quality. At the global level, the coffee market is moving into a clear surplus, with 2025/26 production reaching a new high and consumption weakening. Global output is projected to increase another 6% in 2026/27, largely because of Brazil, while softer imports point to slower demand. The main bullish counterweight is Arabica availability, with ICE-certified stocks remaining near historical lows. Robusta inventories, in contrast, have increased, reinforcing weaker sentiment in that segment.
