Robusta Coffee and Arabica Prices Dive on Brazil's Favorable Weather Outlook

Robusta coffee futures experienced a sharp selloff on Tuesday, with March ICE robusta closing down 219 points (-5.44%), while arabica coffee equally tumbled, sliding 16.15 cents (-4.85%) to hit a 5.5-month low. The plunge extends a week-long downtrend, with robusta touching a 6-week low as market sentiment turns decidedly bearish. According to barchart’s commodity analysis, this decline reflects growing confidence in global coffee supplies and easing production concerns—a significant shift from the tightness that has characterized recent years.

Brazil’s Rainfall Alleviates Drought Concerns

The primary driver behind the price collapse is rainfall relief in Brazil’s primary coffee-growing region. Somar Meteorologia reported that Minas Gerais, responsible for the bulk of Brazil’s arabica production, received 69.8 mm of rain during the week ending in late January—117% of the historical average. This above-normal precipitation has effectively eased concerns about crop stress and damaged yields, thereby pressuring prices downward. Brazilian weather patterns are critical to global coffee supplies, and improved moisture conditions signal robust production prospects for the 2025 harvest cycle.

Vietnamese Robusta Surge and Export Momentum

Vietnam’s position as the world’s dominant robusta producer continues to weigh on robusta coffee prices through aggressive export volumes and rising output forecasts. In early January, Vietnam’s National Statistics Office reported that 2025 coffee exports jumped 17.5% year-over-year to 1.58 million metric tons, overwhelming markets with available robusta supplies. More concerning for price supporters, the Vietnam Coffee and Cocoa Association indicated that 2025/26 production could climb 6% year-over-year to 1.76 million metric tons (29.4 million bags), potentially marking a 4-year production high if weather remains favorable. These projections underscore how Vietnamese robusta coffee continues to flood export channels.

Inventories and Global Supply Dynamics

While ICE-monitored arabica coffee inventories fell to a 1.75-year low of 396,513 bags in mid-November, they have since recovered to 461,829 bags as of early January—a 3.25-month peak that undermines price support. Similarly, robusta stocks dropped to a 13-month low before rebounding to 4,662 lots in recent weeks. The inventory rebound, combined with forward-looking supply optimism, has become increasingly negative for prices across both coffee varieties.

Brazilian Export Weakness Offers Limited Support

One counterbalance to the bearish narrative comes from Brazilian coffee export data. Cecafe reported that December green coffee exports fell 18.4% to 2.86 million bags, with robusta coffee exports collapsing 61% year-over-year to just 222,147 bags. Although this suggests tighter near-term supplies from the world’s largest producer, it has failed to offset global production recovery expectations and Vietnamese robusta momentum.

Global Production Outlook Points to Record Supplies

The USDA’s Foreign Agriculture Service (FAS) bi-annual projection, released in mid-December, reinforced the bearish case for both coffee types. FAS forecasts global coffee production in 2025/26 will reach a record 178.848 million bags, up 2.0% year-over-year, driven by a 10.9% surge in robusta production to 83.333 million bags. Notably, arabica production faces headwinds, expected to decline 4.7% to 95.515 million bags, yet the robusta surge more than compensates. Brazil’s 2025/26 output is projected to slip 3.1% to 63 million bags, but Vietnam’s output is forecast to rise 6.2% year-over-year to 30.8 million bags—a 4-year high. With global ending stocks forecast to fall only modestly by 5.4% from 2024/25 levels, the fundamental backdrop remains ample for prices to remain under pressure.

The confluence of favorable Brazilian weather, expanding Vietnamese robusta capacity, rebounding inventories, and record global production forecasts suggests the near-term environment for coffee prices remains challenging, even as traders monitor emerging weather patterns and export flows.