The global coffee market may be heading into surplus, but an emerging El Niño could threaten to derail the recovery by disrupting Brazil’s next crop at a critical stage, according to an Afreximbank Research report.
Brazil’s 2026/27 coffee harvest is expected to be exceptionally large, helping shift the global market away from four consecutive seasons of supply deficits. But the report warns that an emerging El Niño could disrupt Brazil’s September-October flowering window for the 2027/28 crop, potentially undermining production just as inventories begin to recover.
The weather risk introduces a new source of uncertainty into a market that is already experiencing sharp price swings. Coffee was among the most volatile agricultural commodities in the second half of 2026, with 30-day realised volatility reaching 45%-52% in July, compared with 10%-14% for the broader Bloomberg Commodity Index, according to the report.
The potential disruption comes as Brazil emerges from a period of weaker Arabica production and moves into a much stronger crop cycle. The report says the recovery is large enough to alter the global supply balance, with the pace at which coffee reaches export markets and inventories are rebuilt becoming critical to the direction of prices.
A large harvest, however, does not immediately translate into abundant coffee in physical markets. Harvesting, processing, financing, logistics and inventory rebuilding all take time, leaving prices exposed to weather developments during the transition, the report said.
Weather risk meets a supply surplus
The coffee market is moving from a severe deficit that ended in 2024/25 toward an expected surplus in 2025/26 and 2026/27 as production recovers in major origins.
USDA projections cited by Afreximbank put global coffee output at 189.7 million bags in 2026/27, a 6.1% increase from the previous season. Arabica production is expected to rise 12%, with Brazil’s total production increasing by more than 14%.
That recovery is important because previous shortages were driven by Brazil’s frost and drought, container shortages and logistics bottlenecks. Improved yields and an Arabica “on-year” are now helping reverse those constraints.
But the report says the market’s transition to surplus will not necessarily produce a sustained decline in prices. Whether the surplus creates a meaningful inventory buffer will depend partly on weather conditions and how quickly additional production reaches consumers.
An El Niño-related disruption to Brazil’s next flowering cycle could therefore change the market’s trajectory before the current supply recovery has fully rebuilt inventories.
Brazil remains the key swing factor
Brazil’s production outlook is central to the market because of the scale of its expected recovery. The 2026/27 crop is forecast to be strong enough to put downward pressure on prices, but the report identifies the country’s next flowering cycle as a key variable for the following season.
If flowering conditions are disrupted during September and October, the 2027/28 crop could be affected, creating what Afreximbank describes as a potential weather premium in coffee prices.
That creates an unusual situation for traders and coffee businesses: the market can simultaneously be preparing for increased supply in the near term while pricing the possibility of another supply shock further ahead.
The report’s baseline scenario is one of gradual market normalisation if Brazil delivers a strong 2026/27 crop, Vietnam’s production remains stable or improves and consumption growth slows. But its upside scenario is a weather shock in which disruption to Brazil’s 2027/28 flowering undermines the next crop.
Price pressure remains uneven
The weather risk is also unfolding against a widening divide between Arabica and Robusta markets.
The spread between New York Arabica and London Robusta reached 145.56 USc/lb in August, driven partly by tighter Arabica availability and low ICE-certified inventories. At the same time, Robusta supply has become relatively more comfortable, supported by Vietnam and Brazil’s record Conilon crop.
That price gap is encouraging coffee roasters to substitute Robusta for more expensive Arabica, potentially limiting demand for Arabica even as weather concerns provide support to prices.
For African producers, the divergence is particularly relevant because Uganda’s coffee industry has a substantial Robusta base, while its 2026/27 production is projected at about 7.2 million bags.
Africa faces a volatile market
Africa’s coffee industry enters the period with stronger export earnings but also greater exposure to global price movements.
African coffee exports reached 19.7 million bags in 2024/25, up 19% from the previous year and representing 11.6% of global exports. Ethiopia and Uganda accounted for almost 80% of the continent’s outbound coffee trade.
The report says Ethiopia’s coffee export earnings reached about $3 billion in 2025/26, while Uganda’s rolling 12-month exports reached $2.4 billion.
An El Niño-driven supply disruption could therefore have consequences beyond international commodity prices, affecting the revenue outlook for African producers and exporters that have recently benefited from elevated coffee prices.
At the same time, Afreximbank says African producers need to use the current period of stronger export earnings to improve productivity, climate resilience and domestic processing. Financing for tree rehabilitation and the development of local roasters, packers and aggregators will become increasingly important as global supply normalises and price pressures emerge.
The result is a coffee market caught between two competing forces: a large Brazilian harvest that points toward greater supply and lower prices, and the prospect of El Niño disrupting the next production cycle before the global market has built a sufficient inventory cushion.
For coffee traders, roasters and African exporters, the coming flowering season could therefore prove as important as the current harvest.
