Analysts say stronger production is still insufficient to relieve tight global supply and demand conditions
Brazil’s coffee crop is expected to grow this year, but not enough to ease tight global supply and demand conditions. That was the assessment of industry participants gathered Wednesday (20) at the International Coffee Seminar in Santos, São Paulo.
“We are living through a highly uncertain scenario in which it is impossible to map out any outlook. And this is happening amid climate change and a geopolitical crisis,” said Celso Vegro, a researcher at the Instituto de Economia Agrícola de São Paulo (IEA), on the sidelines of the event.
Companhia Nacional de Abastecimento (Conab) is set to update its estimates for Brazil’s coffee production on Thursday. In its previous forecast, the agency projected a harvest of 66.1 million bags, up 17.1% from 2025.
Private consultancies are pointing to even higher production, potentially surpassing 70 million bags. Expectations of a robust crop are seen as a factor weighing on prices in international commodity exchanges.
On the New York exchange, the July arabica coffee contract closed down 0.68% on Wednesday at $2.6830 per pound. Over the past week, the contract fell 4.42%, according to Valor Data. Over one month, prices declined 6.74%.
In the view of Carlos Augusto Rodrigues de Melo, president of Cooxupé, “Brazil needs to produce 70 million bags, otherwise we will lose market share.” “We expect a good crop both in quality and quantity,” he added in an interview during the International Coffee Seminar.
Melo said current prices remain at good levels, although highly volatile. According to him, there is little coffee available in the market, leaving room for speculation.
Within the coffee industry, the watchword is caution, said Pavel Cardoso, president of ABIC, the Brazilian Coffee Industry Association. He said companies have passed part of the recent price declines on to retailers, but volatility is creating “tension” between buyers and sellers.
“If companies build long inventory positions and prices fall, margins are hurt. If they keep inventories short and prices rise, they are left uncovered. And there is also concern over El Niño. The 2026 crop is potentially the first opportunity to rebuild inventories,” he said.
Vinicius Estrela, from the Brazilian Specialty Coffee Association (BSCA), reinforced those concerns. “Coffee is a long-term crop, and we are having to make short-term decisions with higher costs and uncertainty over commercialization.”
Despite expectations of larger supply in Brazil, Eduardo Carvalhaes, from Escritório Carvalhaes, said he still sees little room, at least for now, for a significant drop in prices.
“In the minds of major buyers, coffee prices will keep falling because the crop will be large. Yet even after all this decline, prices are still at $2.70 [in New York]. [But] the balance between production and consumption is fragile and there are no inventories,” he said on the sidelines of the event.
For IEA’s Vegro, the arrival of the new crop on the market may put pressure on prices, but only in the short term. “Consumption has grown so much, while supply has been constrained, that larger supply now does not offset this imbalance. And logistics costs will eat into part of profitability,” the researcher added.
Last year, coffee exporters incurred an additional R$66.1 million in costs due to inefficiencies at ports, according to calculations by the Conselho dos Exportadores de Café do Brasil (Cecafé). For Eduardo Heron, technical director at Cecafé, concerns for this year are increasing.
“In the second half, with a large volume to ship and the same infrastructure, losses could be even greater,” Heron said. He added that the war in the Middle East and the closure of the Strait of Hormuz are risk factors for the entire supply chain, as they create disruptions to foreign trade.
*By Raphael Salomão, Globo Rural — Santos
Source: Valor International
https://valorinternational.globo.com/