STiR coffee and tea magazine

28 STiR coffee and tea | 2026 Quarter 1 Spring (Mar/Apr/May) By Judy Ganes T C Market Responds to Rising Exports After a tumultuous 2025, the coffee market slowly shifts towards a more balanced situation as global exports rise. Photo credit: Arturo Anez While shipping through the Suez Canal has increased, the recent closure of the Strait of Hormuz has once again disrupted shipping routes. Photo credit: Nazarizal Mohammad he coffee market is in transition, with some relief expected from the supply tightening that has gripped the industry in recent seasons as the next Brazilian harvest becomes available later in the year. Bulls would argue that the market will rally ahead of this and even run to new highs, as in theory the physical market is still constrained. However, markets are forward- looking and will start to respond to future supply rather than continue to react to what amounts to yesterday's news. Rising Global Export Volumes Offset Brazilian Decline The market should already have adjusted for world stocks being at their lean- est ever on an outright basis and relative to consumption, and is now con- sidering how much relief will be possible from a combination of improving output and slower demand growth after successive seasons of high prices. Producers have been incentivized to expand production, as evidenced by ris- ing export volumes. Although Brazilian shipments have slowed considerably, those from other origins are increasing. Asia and Oceania's exports are up 38%, Africa's in- creased by 13.3%, and Mexico and Central America rose 81.3% from 0.45 million bags in December 2024 to 0.82 million bags in December 2025. South America was the only region where exports declined, down 15% to 4.65 mil- lion bags in December 2025 from 5.47 million bags in December 2024. The cumulative total of non-Brazilian exports has more than offset the decline from the leading producer. Focusing on Brazil alone provides a skewed or incomplete market narrative. Markets stop climbing when there is no fresh news to feed a bullish narra- tive, and they also start applying the brakes to discourage continued produc- tion with reckless abandon, which could lead to a vast oversupply for multiple seasons and severely depressed prices as a result. To avoid this boom-bust cycle and a major price crisis that deeply impacts farmers, it is better for the market not to climb to dizzying heights. It would be disastrous for the entire supply chain if the coffee market were to become a vic- tim of high prices, as the cocoa market has been. While there is a key distinction between the cocoa and coffee situations due to the set prices guaran- teed to cocoa farmers this year in both the Ivory Coast and Ghana, which are well above current market levels, extreme price pressure could none- theless have the same negative consequences. Exporters that made commitments to secure supply at higher price levels will not be able to af- ford to sell coffee into a declining market at a loss. Obtaining working capital becomes challenging. Buyers become reluctant to commit to anything beyond a hand-to-mouth basis when the risk of a price decline is imminent, and do not want to rebuild inventory at above-average prices. This tends to add to market selling pressure. Brazil's 2026/27 Crop Outlook The Brazilian 2026/27 crop is now developing under much better conditions than the prior two years. Temperatures have moderated, so there is no additional stress from above-average heat that harms bean sizing and quality — a problem that was evident during processing in the past two har- vests. Abundant rainfall and cooler temperatures should lead to more uniform production, poten- tially increasing the share of the harvest processed as semi-washed coffee and increasing the availabil- ity of Brazilian coffee suitable for delivery against the New York contract, helping to finally rebuild low certified stocks. However, it's unlikely the market has considered this yet.

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