Coffee Markets Face Downward Pressure as Brazil Rain Forecasts Reshape This Week's Trading

Market Moves Signal Shifting Sentiment

Arabica and robusta coffee contracts are experiencing notable weakness heading into the week. March arabica coffee is trading sharply lower at -3.41%, while March ICE robusta coffee faces pressure with a -1.02% decline. The primary catalyst stems from meteorological developments across Brazil’s primary growing regions, where rainfall expectations over the coming seven days have eased previous concerns about moisture deficiency—a shift that’s cooling bullish sentiment in the futures pits.

Why the Dollar Matters for Your Coffee Trade

Beyond weather dynamics, the dollar index’s climb to its highest level in four weeks is functioning as a secondary headwind. A stronger greenback typically dampens demand for dollar-denominated commodities on the international stage, creating additional downside pressure across the coffee complex.

Vietnam’s Export Surge Weighs on Robusta

Robusta contracts have absorbed particular selling pressure this week following Vietnam’s export acceleration. Government statistics from Hanoi revealed that 2025 coffee shipments reached 1.58 million metric tons, representing a robust +17.5% year-over-year jump. As the world’s dominant robusta supplier, Vietnam’s expanding export volumes create structural headwinds for robusta pricing.

Brazil’s Moisture Picture Remains Mixed

While this week’s rain forecast provided temporary relief, Brazil’s arabica situation remains nuanced. Minas Gerais, responsible for the lion’s share of Brazilian arabica production, had received only 47.9mm of rainfall during the week concluding January 2—about 67% of what climatological records suggest is typical for the period. This history of below-average precipitation had previously supported arabica’s 4-week rally earlier in the trading week.

Inventory Developments: The Mixed Signal

Contract warehouse stocks tell a complicated story for those timing coffee positions. ICE arabica inventories bottomed at 398,645 bags during November but have recovered to 461,829 bags, suggesting normalization rather than structural tightness. Robusta warehouse positions similarly bottomed at 4,012 lots in December before recovering to above 4,200 lots—a pattern that typically coincides with price moderation.

US Import Dynamics Shift the Demand Picture

American coffee buying patterns offer insight into shifting consumption realities. When Trump-era tariff regimes were in effect from August through October, US purchases of Brazilian coffee collapsed by 52% compared to year-ago levels, reaching just 983,970 bags. Though those tariff barriers have since been reduced, domestic American inventories remain compressed, potentially limiting near-term import acceleration even with lower duties.

Production Forecasts Paint an Abundant Global Picture

Forward-looking supply estimates are reinforcing the bearish undertone. Brazil’s government crop agency Conab elevated its 2025 production forecast by 2.4% to 56.54 million bags, suggesting output expansion despite historical weather challenges. Meanwhile, Vietnam’s coffee production is projected to climb 6% year-over-year to 1.76 million metric tons—potentially reaching a 4-year peak. The Vietnam Coffee and Cocoa Association even suggested that if weather cooperates through the season, 2025/26 output could exceed the previous year by 10%.

What Global Coffee Exports Actually Tell Us

The International Coffee Organization’s November data revealed that global coffee exports through the current marketing year fell marginally by -0.3% year-over-year to 138.658 million bags—hardly a sign of crisis-level scarcity. The USDA’s latest projections pushed world 2025/26 production to a record 178.848 million bags, with robusta climbing +10.9% but arabica declining -4.7%.

Bottom Line for This Week’s Action

The convergence of Brazilian rainfall prospects, strong dollar conditions, and Vietnamese export momentum has created a challenging environment for coffee buyers seeking bargains. However, ending global stocks are expected to tighten slightly, declining -5.4% according to USDA forecasts, which could limit downside follow-through if supply disruption concerns resurface.