Global Coffee Markets Face Average Weather Patterns as Brazil Counters Vietnam Supply Surge

Coffee futures markets delivered mixed signals on trading activity, with arabica contracts posting modest gains while robusta prices slipped to four-week lows. The underlying tension reflects competing supply pressures—Brazil’s rainfall has stabilized around average levels, supporting production outlooks, while surging Vietnamese exports are weighing on price premiums for the inferior robusta variety.

Rainfall Returns to Average Levels in Brazil’s Coffee Heartland

Recent precipitation across Brazil’s premier coffee region tells an important story. Somar Meteorologia reported that Minas Gerais, responsible for the bulk of Brazil’s arabica crop, received rainfall measuring 117% of the historical average during its latest measurement period. While above-average moisture sounds beneficial for bean development, commodity markets interpret ample water supplies differently—they signal robust harvests ahead and potential oversupply scenarios that pressure prices downward.

Brazil’s official crop forecasting agency, Conab, already raised its 2025 production estimate by 2.4% to 56.54 million bags, reflecting confidence in yield prospects. For arabica coffee, which represents the higher-quality segment of global supplies, this outlook dampens near-term price support. Technical traders capitalized on minor short-covering activity to lift arabica into positive territory, but underlying fundamentals remained challenged as forecasts predicted sustained rainfall through the main growing window.

Vietnamese Robusta Production Hits 4-Year Peak Despite Global Supply Pressures

The robusta segment faces even steeper headwinds. Vietnam’s National Statistics Office disclosed that early 2025 coffee exports surged 17.5% year-over-year to 1.58 million metric tons, with full-year production projections climbing 6% to reach 1.76 million metric tons—the highest level in four years. The Vietnam Coffee and Cocoa Association corroborated these figures, suggesting favorable weather conditions could push 2025/26 output 10% higher than the prior season.

As the world’s dominant robusta producer, Vietnam’s expanding production capacity directly conflicts with near-term price sustainability. Higher Vietnamese export volumes represent the largest structural headwind for robusta contracts, creating persistent selling pressure despite efforts by some traders to stabilize positions.

Stock Recovery and Export Trends Shape Near-Term Price Trajectory

Inventory dynamics present a more nuanced picture. While ICE-monitored arabica stocks fell to a 1.75-year floor of approximately 398,645 bags in November, they subsequently recovered to 461,829 bags by mid-January. Similarly, robusta warehouse holdings touched a 1-year minimum before bouncing back to four-month highs. This inventory rebound—while modest in absolute terms—signals that supply tightness concerns are easing among market participants.

Brazilian coffee exports tell a different story. Cecafe reported that December green coffee shipments contracted 18.4% compared to the year-earlier period, with arabica exports down 10% and robusta exports declining sharply by 61%. This export weakness suggests Brazilian producers are managing timing strategically, potentially withholding supplies ahead of anticipated price adjustments.

Global Supply Landscape Shifts Expectations Downward

The International Coffee Organization confirmed that global exports fell marginally year-over-year for the current marketing cycle, hinting at earlier-than-expected supply management. However, the USDA’s Foreign Agriculture Service delivered a more expansive outlook, projecting world coffee production for 2025/26 will reach a record 178.8 million bags—rising 2.0% despite a 4.7% expected decline in arabica balanced against a 10.9% surge in robusta production.

FAS forecasts Brazil’s production declining 3.1% to 63 million bags while Vietnam’s output accelerates 6.2% to 30.8 million bags. The net effect: global ending stocks are expected to contract 5.4%, though this calculation assumes no major weather disruptions in the second half of the crop year.

What Average Conditions Mean for Price Direction

The fundamental dynamic remains unchanged: above-average precipitation in Brazil supports yields but undermines prices through supply abundance, while Vietnam’s production climbing to four-year peaks introduces structural downward pressure on robusta values. Markets are essentially pricing in the reality that average weather conditions in major producing regions will translate to average or above-average harvests—a scenario that favors consumers and traders positioned for lower price structures rather than producers betting on supply constraints.