Barchart Coffee Analysis: Price Pressures Mount Amid Brazil Weather Outlook

Across commodity markets monitored by Barchart, coffee futures have come under significant selling pressure. March arabica contracts fell 3.8% in recent trading, while robusta coffee experienced a 1.6% decline. These drops represent notable setbacks—arabica touched a 5.5-month low while robusta slipped to a 3.5-week floor. Market sentiment has shifted as meteorological forecasts point to steady rainfall expected across Minas Gerais, Brazil’s dominant coffee-producing region, over the coming week.

Supply Dynamics Weighing on Market Sentiment

The outlook for ample global coffee supplies has emerged as the primary headwind for valuations. Brazil’s crop forecasting body, Conab, significantly raised its production estimate for 2025, increasing the projection by 2.4% to reach 56.54 million bags—up from the earlier forecast of 55.20 million bags issued in September. Such abundance of anticipated supply creates a challenging environment for price support.

Vietnam, the world’s leading robusta producer, is adding to downward pressure through surging export volumes. Official statistics released in early January confirmed that Vietnam’s coffee shipments jumped 17.5% year-over-year to 1.58 million metric tons. Looking forward, Vietnam’s 2025/26 coffee production is projected to climb 6% annually to 1.76 million metric tons (29.4 million bags), marking a four-year peak. The Vietnam Coffee and Cocoa Association has suggested output could reach 10% above prior-year levels if weather remains favorable.

Inventory Trend Shifts Present a Mixed Picture

The recovery in exchange-monitored coffee inventories has worked against price bulls. While arabica stockpiles at ICE fell to a 1.75-year nadir of 398,645 bags on November 20, they subsequently rebounded to a 2.5-month high of 461,829 bags as January progressed. Similarly, robusta holdings slipped to a one-year low of 4,012 lots in mid-December, but since recovered to 4,609 lots in recent sessions.

Brazilian export activity paints a more supportive picture. Cecafe, which tracks coffee commerce, reported that December green coffee shipments from Brazil contracted 18.4% month-over-month to 2.86 million bags, with arabica exports declining 10% annually and robusta exports falling 61% year-over-year. This export weakness suggests some tightening in the physical market pipeline.

Weather Pattern and Global Context

Brazil’s largest arabica-growing area, Minas Gerais, received only 33.9 mm of rainfall during the week ending January 16—approximately 53% of the typical historical average. Below-normal precipitation has historically supported prices by raising concerns about yield risks, though the near-term forecast for additional rains may alter this dynamic.

From a global perspective, the International Coffee Organization reported that worldwide coffee exports for the current marketing year (October-September) edged down just 0.3% year-over-year to 138.658 million bags, suggesting supply remains relatively stable despite regional variations.

Looking Ahead to 2025/26 Season

The U.S. Department of Agriculture’s Foreign Agriculture Service, referenced in Barchart’s commodity bulletins, projects world coffee production in 2025/26 will increase 2% annually to a record 178.848 million bags. However, this growth masks diverging regional trends: arabica production is forecast to decline 4.7% to 95.515 million bags, while robusta output is expected to surge 10.9% to 83.333 million bags.

Brazil’s production is anticipated to slide 3.1% year-over-year to 63 million bags, while Vietnam’s output is projected to climb 6.2% to reach 30.8 million bags—also a four-year high. These projections suggest a structural shift in the global coffee market, with robusta gaining share relative to the higher-quality arabica segment. Global coffee inventories at the conclusion of 2025/26 are forecast to fall 5.4% to 20.148 million bags from 21.307 million bags in the previous season, potentially providing some long-term support for values.