Vietnam's Coffee Surge Pressures Robusta, While Brazil's Dry Weather Props Up Arabica Prices

The coffee market is flashing mixed signals today, with futures showing divergent movements. March arabica is trading +0.60 (+0.17%), bolstered by weather support from Brazil, while March robusta has slipped -100 points (-2.53%), touching a one-week trough as Vietnam ramps up exports.

Vietnam’s Export Boom Weighs on Robusta

Vietnam, the world’s dominant robusta producer, is flooding the market with record shipments. According to Vietnam’s National Statistics Office, 2025 coffee exports surged +17.5% year-over-year to 1.58 million metric tons. This surge is easing supply tightness concerns that previously buoyed prices. Looking ahead, Vietnam’s production is projected to climb +6% for 2025/26 to 1.76 MMT (29.4 million bags), marking a four-year high, with potential for another 10% gain if weather cooperates.

Brazil’s Drought Support Lifts Arabica

In contrast, arabica is finding support from weather pressures in Brazil. Somar Meteorologia reported that Minas Gerais, Brazil’s largest arabica-producing region, received only 47.9 mm of rain in the week ended January 2—just 67% of the historical average. This deficit is lending upside momentum to the arabica complex.

Compounding the support, the Brazilian real surged to a three-week peak against the dollar today. A stronger real typically discourages Brazilian coffee producers from pushing exports, inadvertently tightening near-term supply dynamics.

Inventory Pressures Show Mixed Signals

ICE storage data reveals diverging inventory trends. Arabica warehoused supplies fell to a 1.75-year low of 398,645 bags on November 20, though they’ve since rebounded to a two-month high of 456,477 bags by December 24. Robusta inventories similarly dipped to a one-year low of 4,012 lots on December 10 before recovering to 4,278 lots by late December.

The tighter inventory backdrop historically supports prices, but the recovery in stored supplies suggests some relief from extreme scarcity.

US Tariff Normalization Reshapes Buying Patterns

US coffee demand from Brazil tells an instructive tale. During the Trump tariff period (August-October), American coffee purchases of Brazilian beans plummeted 52% year-over-year to 983,970 bags. Even though those tariffs have since been trimmed, US coffee inventories remain constrained, suggesting delayed restocking rather than an immediate demand surge.

Production Growth Outlook Tempers Bull Case

Global production momentum is set to expand meaningfully. Brazil’s 2025 crop forecast was raised by 2.4% to 56.54 million bags, per Conab’s December update. More significantly, the USDA’s Foreign Agriculture Service projects world coffee production for 2025/26 will reach a record 178.848 million bags, up +2.0% year-over-year. However, this masks a critical split: arabica output is forecast to decline -4.7% to 95.515 million bags, while robusta production is slated to surge +10.9% to 83.333 million bags.

Vietnam’s specific contribution looms large—FAS forecasts the nation will produce 30.8 million bags for 2025/26, a +6.2% jump and a four-year peak, reinforcing the robusta glut narrative.

The Bottom Line

Coffee traders are wrestling with conflicting currents: robust arabica support from Brazilian weather constraints and currency strength, offset by a robusta supply deluge from Vietnam. Global ending stocks are projected to tighten -5.4% to 20.148 million bags for 2025/26, but the composition matters—robusta abundance is undercutting prices despite structural supply tightness elsewhere in the complex.