A Price Trap of Their Own Making
Brazil’s green coffee exports fell 26.9% in February to 2.29 million bags, the second consecutive month of steep declines after January’s 30.8% drop, according to the Brazilian Coffee Exporters Council (Cecafé). The combined January–February total is running roughly 29% below the same period last year — a sharp reversal for the world’s largest coffee producer and exporter, which shipped a record 44.75 million bags in the 2024/25 crop year.
The headline explanation is price. Arabica futures on the New York ICE exchange, which had surged past $3.70 per pound in mid-2025 amid U.S. tariffs and thin liquidity, fell sharply in early 2026 as funds liquidated long positions in anticipation of a much larger Brazilian harvest next season. Conab, Brazil’s crop forecasting agency, projects 2026/27 production at a record 66.2 million bags — a 17% jump driven by a 23% recovery in arabica output as Brazil enters the “on-year” of its biennial production cycle. The selloff dragged arabica to a four-month low near $2.80 in early February before a partial recovery. The Trump administration’s removal of the 50% tariff on Brazilian coffee in November 2025 also eased the supply squeeze that had kept prices artificially elevated for months.
Farmers Holding, Market Share Slipping
But the price drop alone does not explain the export collapse. Brazilian growers, capitalized by two years of extraordinary margins, are choosing to hold rather than sell. A stronger real — which appreciated roughly 14% against the dollar over the course of 2025 — reduced the local-currency value of dollar-denominated exports, further weakening the incentive to ship. Cecafé president Márcio Ferreira said these factors combined to “dose Brazilian supply at levels not competitive for new business compared with other origins.”
The risk is structural. If Brazilian farmers continue withholding supply until the new crop arrives in June, competing origins — particularly Vietnam for robusta and Colombia for washed arabicas — will fill the gap. Ferreira warned that the trend “should persist until the entry of the next harvest, causing a loss of market share for Brazil against other producing origins, which is obviously not favorable in the medium and long term.” In a global market where buyer relationships and logistics chains take years to build, even temporary withdrawal can have lasting consequences.
Processed Coffee Bucks the Trend
Not all segments declined. Brazil exported 323,900 bags of processed coffee in February, up 13.3% year-on-year, with soluble coffee accounting for nearly all of the volume at 320,700 bags. The growth in processed exports reflects a deliberate government strategy to move up the value chain and reduce dependence on raw commodity shipments — a push that has gained political support under Lula’s industrial policy agenda.
Including both green and processed coffee, total Brazilian exports reached 2.62 million bags in February, down 23.5%. Export revenue fell 14.7% to $1.06 billion — a smaller decline than the volume drop, reflecting the fact that despite the selloff, coffee prices remain historically elevated. Arabica futures were still trading near $2.97 per pound as of this week, roughly double the average level of 2023. The question is whether Brazilian farmers’ bet on waiting will pay off when the record crop arrives, or whether they will find that the buyers they turned away have already locked in supply elsewhere.