The Arabica Coffee Producer Export Participation Index (IPEP) closed the 2025/26 crop year at 88.2%, once again confirming the strong integration between Brazil’s domestic coffee market and international markets. The result shows that Brazilian exporters continue to pass through virtually all proceeds from FOB sales into prices paid to producers in the domestic market, while absorbing, within the remaining 11.8%, all costs associated with the export process, including transportation, warehousing, processing, port expenses, certifications, financing costs, foreign exchange risk, and other operating expenses.

The crop year was marked by an environment of exceptionally high prices. Average FOB prices reached US$413.91 per bag, one of the highest levels ever recorded for Brazilian Arabica coffee, reflecting reduced global inventories, successive adverse weather events, and strong international demand. In the domestic market, the different coffee quality grades followed this upward trend. Crop-year averages reached US$371.64 per bag for Hard, US$338.13 for Riada, US$315.20 for Rio, US$346.10 for Average 1 (the weighted average of the quality grades), and US$364.66 for Average 2 (the three-month weighted moving average), making the 2025/26 crop year one of the most profitable for Brazilian coffee production in recent decades.

Throughout virtually all of 2025, the market remained highly concerned about the growing burden associated with export operations. The limited availability of higher-quality coffees sustained an environment of elevated volatility and contributed to maintaining historically high prices in the domestic market.

The quarterly evolution of the index further illustrates this trend. In the first quarter of 2025, as uncertainty surrounding Brazil’s crop intensified, the IPEP stood at 89.1%. During the second and third quarters, continued close alignment between domestic and FOB prices drove the index to 97.0% and 97.5%, respectively. In the fourth quarter of 2025 and the first half of 2026, however, as crop expectations became more firmly established and international demand eased, export returns began to exceed domestic prices more consistently, bringing the index to 88.4%, 83.7%, and 83.1%, respectively, resulting in a crop-year average of 88.2%.

Rather than indicating an economic advantage of exporting, this result highlights the efficiency of Brazil’s export sector. An IPEP of 88.2% means that Brazilian producers received, on average, nearly 90% of the international FOB price, despite all the costs required to deliver Brazilian coffee to consumer markets. In other words, the difference between domestic and international prices largely reflects the actual costs of exporting, demonstrating that Brazilian exporters operate with a high degree of competitiveness while passing through virtually the full international value to the domestic market.

The 2025/26 crop year will be remembered as one of the most significant in the recent history of Brazilian coffee production. In addition to recording one of the highest price levels ever observed for Arabica coffee, it confirmed the ability of Brazil’s export sector to pass through gains from international markets to producers while preserving the country’s competitiveness as the world’s leading supplier of Arabica coffee. The IPEP results therefore reinforce the efficiency of Brazil’s coffee marketing system and the close integration between Brazil’s domestic market and international markets.