Global Coffee Market Mixed as Supply Dynamics Shift Amid Brazil's Dry Weather

Coffee futures displayed divergent momentum on Monday, with arabica gaining strength while robusta faced headwinds. March arabica coffee edged upward by +2.05 points (+0.57%), whereas March robusta coffee retreated -36 points (-0.91%) to touch a one-week low.

Brazil’s Arabica Supports as Rainfall Falls Short

The arabica rally was underpinned by Brazil’s insufficient moisture levels. Minas Gerais, which accounts for the majority of the world’s arabica supply, recorded only 47.9 mm of rainfall in the week ending January 2—representing just 67% of its historical norm. This dryness has bolstered arabica prices amid concerns over crop development. Additionally, a stronger Brazilian real reached a three-week peak against the dollar, making exports less attractive and further supporting local prices.

Vietnam’s Robust Coffee Surge Weighs on Robusta

Robusta coffee faced distinct pressure from Vietnam’s expanding output. The nation’s 2025 coffee shipments surged +17.5% year-over-year to 1.58 million metric tons, reflecting the world’s largest robusta producer’s continued dominance. This supply abundance is easing market concerns and capping price appreciation for robusta futures.

Inventory Trends Offer Mixed Signals

ICE-monitored arabica stocks recently touched a 1.75-year low of 398,645 bags in November before recovering to 456,477 bags by late December. Robusta inventories similarly dipped to a one-year low of 4,012 lots in December before rebounding to 4,278 lots. These tighter levels traditionally support price floors, though the broader supply outlook remains ample.

Brazilian Production Outlook and US Import Patterns

Brazil’s federal crop forecasting agency Conab elevated its 2025 production estimate by 2.4% to 56.54 million bags, signaling robust output despite weather variability. Meanwhile, US coffee purchases from Brazil dropped 52% from August through October compared to the prior year, reaching 983,970 bags—a legacy effect of earlier tariff pressures that have since been reduced.

Global Supply Projections Temper Near-Term Enthusiasm

The USDA’s Foreign Agriculture Service projects world coffee production in 2025/26 will climb +2.0% year-over-year to a record 178.848 million bags. However, arabica production is forecast to decline -4.7% to 95.515 million bags, while robusta output expands +10.9% to 83.333 million bags. Vietnam’s output is anticipated to reach 30.8 million bags, a four-year high, while Brazil’s production may slip -3.1% to 63 million bags. Ending global stocks are projected to fall -5.4% to 20.148 million bags, maintaining underlying support for prices amid tighter conditions.