Jun 12 / Laleska Moda

As Brazilian Harvest progress, downward pressure tends to increase

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  • Arabica and Robusta coffee prices fell in the past week, amid expectations of an increase in supply, as the Brazilian 26/27 coffee harvest progress. Arabica July futures traded below 250 c/lb for the first time since November 2024.

  • Although prices rebounded between Wednesday (10) and Friday (12), the movement reflected more technical movements and the approach of July options expiry, with the medium-term trend remaining bearish.   

  • New estimates for the 26/27 production also arrived in the market in the past days, reinforcing the scenario of a record crop in Brazil and a surplus in the cycle. USDA, for instance, points to an increase of over 8 M bags in relation to 25/26, to 71.9 M bags in the season. 

  • For now, our estimates remain unchanged, with a production of 75.8 M bags of coffee in Brazil in 26/27. New revisions will be made after a higher volume of coffee is harvested and the processing yields are assessed.  

  • Although supply is now more limited in other origins, due to the offseason, the inevitable increase in supply in Brazil in the next weeks is likely to continue to pressure prices down, although long term price scenario can have additional risk from the El Niño. 

As Brazilian Harvest progress, downward pressure tends to increase 

Coffee prices have been dropping since early 2026 due to the expectation of a good crop in Brazil in 26/27. However, as the harvest pace starts to increase, price reduction has been more significant, especially for Arabica, with the July contract falling below 250 c/lb last week to levels not seen since November 2024. Friday, June 05, the contract even set a one-and-a-half-year low at 243.3 c/lb. 

Although prices rebounded between Wednesday (10) and Friday (12), this movement reflected mainly technical factors – as the market was technically oversold – with the approach of the July contract options expiry. However, even with the harvest at a slightly slower pace than previous years, the general outlook is still bearish, as Brazil is now harvesting a record crop.

The harvest in the country reached 30% this week, still behind the 33% average levels, but an improvement from past weeks. For Arabica, 23% of the crop has been harvested, versus a five-year average of 25%, while the Conilon harvest stands at 43%, also lagging its 49% average. The lower pace, especially in Arabica regions, is mainly a reflection of the late blooms in 2025, as most coffee plantations had their main flowering in mid-October. 

Even though this week rain could delay the works and most farmers continue to withhold sales, the pace should increase gradually in the coming weeks, with the harvest peak expected in July. By then, the market could see increased availability of Brazilian coffee – particularly from previous seasons – as producers may need to make room for the new crop, which could increase downward pressure on prices, especially on the September contract. 

Brazil: Arabica Harvest Pace (% of total)

Source: Safras & Mercado

Brazil: Conilon Harvest Pace (% of total)

Source: Safras & Mercado

Regarding the Brazilian crop size, expectations remain for a record production, leading to a surplus in the 2026/27 season. Not only are other houses on the market updating their figures, but the USDA also released its first estimate for the country’s production last week, which added to the downward pressure in the past week and early this week. According to the American Department, total output in the 2026/27 cycle should reach 71.9 M bags of coffee, an increase of 14.1% from the 2025/26 cycle. Arabica production is expected to hit 47.5 M bags, up 24% from 2025/26, while Conilon output is set at 24.4 M bags, a decrease of 2.4% in relation to the previous season. 

The figures are slightly lower than Hedgepoint estimates: we expect a production of 50.2 M bags of Arabica and 25.6 M bags of Conilon, with a total volume of 75.8 M bags. However, it is important to note that these figures will be thoroughly reviewed after the harvest proceeds further, so it's possible to assess the processing yields.     

Arabica production (25/26 x 26/27 – Hedgepoint and USDA)

Source: European Commission, Hedgepoint

Conilon production (25/26 x 26/27 – Hedgepoint and USDA)

Source: European Commission, Hedgepoint

Pricewise, as stated earlier, this record crop in Brazil is increasing bearish pressure, as it is expected to contribute to a surplus in the 2026/27 season – particularly weighing on the September contract in the coming months.

There are, however, some medium- to long-term risks that could introduce volatility into the market, especially for the December contract for Arabica and the November and January contracts for Robusta. First, the coffee market structure remains inverted at a time when financial costs are still high and could increase further, as several countries may be forced to raise interest rates amid persistent inflation. This dynamic tends to support lower stocks at destination, alongside higher carryover stocks at origin.

As a result, the market becomes more sensitive to supply and demand fluctuations, potentially triggering sharper price volatility. In addition, there are increasing risks related to El Niño and its impact on coffee production. As highlighted in previous analyses (link), the phenomenon could bring drier weather to Central America and Southeast Asia, affecting washed Arabica production in 2026/27 and Robusta output in both the 2026/27 and 2027/28 seasons, while posing a relatively smaller risk to Brazil in 2027/28. 

LN-Robusta (USD/mt), NY-Arabica and Arbitrage (c/lb) (1st contract)

Source: LSEG

In Summary

Coffee prices have been declining since early 2026, driven by expectations of a strong 2026/27 Brazilian crop. The drop intensified as harvest activity progressed, with Arabica prices falling sharply – July futures reached a one-and-a-half-year low near 243 c/lb. Recent rebounds were mainly technical, linked to oversold conditions and contract expiry, while the broader outlook remains bearish. Despite a slightly slower harvest pace due to late flowering, progress is improving, and a record Brazilian crop is expected, with both USDA and market estimates pointing to a significant increase in production and a surplus in 2026/27.

Looking ahead, increased availability of coffee – especially as farmers clear stocks ahead of the new crop – could add further downward pressure, particularly on the September contract. However, medium- to long-term risks may introduce volatility. The inverted market structure, combined with persistently high interest rates, supports lower destination stocks and higher origin inventories, increasing price sensitivity to market shifts. Additionally, the growing likelihood of an El Niño event poses risks to production in Central America and Southeast Asia and could increase volatility. 

Weekly Report — Coffee

Written by Laleska Moda

laleska.moda@hedgepointglobal.com

Reviewed by Carolina França
carolina.franca@hedgepointglobal.com
www.hedgepointglobal.com

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