Are Coffee Prices Heading Higher? Supply Chains and Production Forecasts Reshape the Market

Coffee prices are experiencing upward momentum in early 2026, with May arabica futures trading 1.42% higher and May robusta contracts surging 4.39%, reaching a two-week peak. The question of whether coffee prices are going up hinges on competing forces in the global supply chain—geopolitical disruptions driving costs higher, while record-breaking production forecasts threaten to weigh on valuations down the line.

Geopolitical Shocks Push Coffee Prices Up, But Relief May Be Coming

The immediate catalyst propelling coffee prices higher is the disruption of maritime traffic through the Strait of Hormuz due to regional tensions. This geopolitical event has triggered a cascade of cost pressures: global shipping rates have climbed, insurance premiums have surged, and fuel costs have elevated substantially. For coffee importers and roasters worldwide, these increased logistics expenses translate directly into margin compression, at least in the near term.

However, the trajectory of coffee prices faces a significant headwind from an unexpected source: abundant rainfall across Brazil’s key growing regions. Brazil’s Minas Gerais area, the nation’s largest arabica coffee producer, received 78mm of precipitation during mid-February—131% of the historical average. This moisture boost has dramatically improved crop prospects, introducing a bearish dynamic that restrains arabica price gains despite geopolitical tailwinds.

Record Production Forecasts Loom Over Long-Term Coffee Price Outlook

Looking at the broader supply picture reveals why coffee prices may face pressure despite current strength. Brazil’s crop forecasting agency, Conab, announced on February 5 that the nation’s 2026 coffee production will surge by 17.2% year-over-year to a record 66.2 million bags. Within this total, arabica production is projected to jump 23.2% to 44.1 million bags, while robusta output is expected to climb 6.3% to 22.1 million bags.

These Brazilian gains are reinforced by global production trends. Rabobank recently reported that worldwide coffee production for the 2026/27 season is forecast to reach an unprecedented 180 million bags, representing approximately 8 million bags of additional supply compared to the prior year. Meanwhile, the USDA Foreign Agriculture Service offered a comparable forecast on December 18, projecting global coffee production at 178.848 million bags for 2025/26—a 2.0% year-over-year increase—with robusta production rising sharply by 10.9% while arabica production declined 4.7%.

These production forecasts suggest that coffee prices, while rising today, face structural challenges in sustaining higher levels as harvests materialize.

Vietnam’s Export Surge and Colombia’s Production Weakness Create Divergent Supply Dynamics

Vietnam’s role as the world’s largest robusta producer has become increasingly important to global coffee price dynamics. The nation’s coffee exports surged 38.3% year-over-year in January, reaching 198,000 metric tons. For the full year 2025, Vietnam’s coffee exports jumped 17.5% year-over-year to 1.58 million metric tons. Even more significantly, Vietnam’s 2025/26 coffee production is projected to climb 6% year-over-year to 1.76 million metric tons (29.4 million bags), marking a 4-year high and signaling continued robusta supply strength.

This robust supply from Vietnam contrasts sharply with production challenges in Colombia, the world’s second-largest arabica producer. Colombia’s coffee production fell 34% year-over-year in January to just 893,000 bags, according to the National Federation of Coffee Growers. This sharp decline in arabica supplies from a key origin provides some support for coffee prices in the near term, though it is insufficient to offset the global supply expansion from Brazil and Vietnam.

Global Inventories Rebound, Adding Bearish Pressure on Coffee Prices

A critical indicator for coffee prices is the state of global inventories monitored by the ICE exchange. After arabica inventories fell to a 1.75-year low of 396,513 bags on November 18, they have since recovered to 466,055 bags as of late January—a 4-month high. Similarly, robusta coffee inventories, which touched a 14-month low of 4,012 lots in December, have rebounded to 4,662 lots, representing a 2.75-month high as of late January.

This inventory rebound is typically bearish for coffee prices, as rising stockpiles suggest suppliers have confidence in the supply outlook and are comfortable building positions. The International Coffee Organization reported that global coffee exports during the current marketing year fell 0.3% year-over-year to 138.658 million bags, a sign that despite production growth, export momentum has moderated.

What’s Ahead for Coffee Prices: A Narrowing Window for Higher Levels

The outlook for coffee prices in the coming months appears constrained between near-term support from geopolitical cost pressures and medium-term headwinds from record production forecasts. Brazil’s January coffee exports fell 42.4% year-over-year to 141,000 metric tons, suggesting that some supply has already been absorbed by earlier purchasing or diverted to other channels. However, this temporary export softness is unlikely to sustain coffee prices at elevated levels once the new harvest season reaches full momentum.

The USDA Foreign Agriculture Service projects that 2025/26 ending stocks will decline 5.4% to 20.148 million bags from 21.307 million bags in the prior year, but this modest drawdown does not suggest severe scarcity. With Brazil’s coffee production forecast to decline 3.1% year-over-year to 63 million bags—a notable pullback from extraordinary 2025/26 levels—and Vietnam’s output continuing to rise 6.2% year-over-year to 30.8 million bags, the global supply picture remains well-stocked.

In conclusion, while coffee prices are moving higher today driven by shipping cost pressures, the fundamental question of whether they can sustain these gains depends on how quickly new production comes to market. Current momentum may not persist once record harvests arrive, suggesting that traders and market participants should closely monitor production releases and shipment data in the months ahead.