Global Coffee Surplus Looms: Singapore Faces Rising Prices Amid Supply Challenges

The global coffee market is bracing for a substantial surplus in the 2026-27 season, largely driven by a potential record crop in Brazil, the world's leading coffee producer. Analysts predict that this surplus could be the largest in years, yet uncertainties remain about how much of this coffee will actually reach exchange warehouses that stabilize prices across the industry.

In 2026, arabica coffee prices have exhibited significant volatility, with exchange-certified stockpiles dwindling to their lowest levels since 1999. Prices are close to their highest levels this year, near $3.50 (S$4.50) per pound (454g). According to Judy Ganes, president of J. Ganes Consulting, the lack of incentive for traders to deliver beans to exchange warehouses has complicated the situation. Ganes said the math changed, and it no longer made sense to deliver as much coffee to the exchange warehouses.

“Ganes said the math changed, and it no longer made sense to deliver as much coffee to the exchange warehouses.”Judy Ganes, President, J. Ganes Consulting

Exchange warehouses play a critical role in the coffee market by absorbing beans when demand is low and providing a buffer during supply shortages. However, with roasters increasingly purchasing beans in the physical market at elevated prices, the situation remains precarious. Ganes warned that without a significant recovery in exchange stocks, prices could continue to fluctuate sharply, potentially squeezing traders and consumers alike.

In Singapore, the impact of these global trends is already being felt. Local coffee prices have risen, with the average price of a traditional cup of "kopi" (coffee with milk) reaching S$1.35, a 7% rise from the previous year. This increase is attributed to various factors, including rising production costs and a decline in local coffee production. The Singapore Coffee Association reported that robusta prices in Indonesia have surged significantly, with costs now around S$240 for a 60-kilogram bag, up from S$180 a year ago.

Local coffee producers face their own challenges, including adverse weather conditions that have negatively impacted yields. The United States Department of Agriculture forecasted an 18% decline in Indonesia's coffee production from a year ago to its lowest level since 2011/12. This has led to increased prices for robusta coffee, which is predominantly used in Singapore's hawker centres and coffee shops. Victor Mah, president of the Singapore Coffee Association, noted that in the last four to five months, robusta prices in Indonesia have moved very drastically, reflecting the tightening supply.

“Victor Mah noted that in the last four to five months, robusta prices in Indonesia have moved very drastically.”Victor Mah, President, Singapore Coffee Association

As local coffee shops grapple with rising operational costs, many have begun adjusting their prices. Reports indicate that several coffee outlets in Singapore have raised beverage prices by 10 to 30 cents, citing increased costs for ingredients, transportation, and utilities. The adjustments are seen as necessary to maintain profitability amid a challenging economic environment.

While the anticipated global surplus may offer some relief in the long term, the immediate outlook for Singaporean consumers remains influenced by these supply and cost factors.