How Brazil's Heavy Rains and Vietnamese Exports Weigh on Global Coffee Prices

Coffee prices remain volatile as multiple headwinds weigh on market sentiment, even as some technical support emerged today. March arabica futures rose +0.39%, while March ICE robusta coffee fell -2.24% to a four-week low. The divergence reflects deeper market dynamics where supply optimism battles demand concerns, particularly as Brazil’s generous rainfall and Vietnam’s surging exports continue to pressure prices downward.

Coffee Futures Under Pressure: Mixed Market Signals

Today’s trading showed typical sideways action—arabica managed modest gains through short covering, yet this recovery proved fragile after failing to break above last Friday’s five-month low. Robusta’s weakness told a starker story, sliding into four-week lows as investors digest the structural headwinds facing both arabica and robusta markets. The disconnect between arabica’s mild bounce and robusta’s ongoing slide highlights how differently the market is pricing the two coffee types as supply dynamics shift.

Brazilian Rainfall: Boon for Yields, Bane for Prices

Brazil’s coffee heartland received substantially more moisture than normal during late January. Somar Meteorologia reported that Minas Gerais, which supplies a significant portion of global arabica, collected 69.8 mm of rain in the week ended January 30—some 17% above the historical average. While such moisture supports plant health and productivity, it simultaneously weighs on coffee prices by brightening the supply outlook.

This supply abundance contrasts with earlier supply tightness. Last week Brazil reported that December green coffee exports fell sharply by 18.4% compared to the prior year, with arabica shipments down 10% and robusta down a steeper 61%. However, looking ahead, Conab’s December forecast suggested the tighter near-term supply picture will reverse. The Brazilian government’s crop forecasting agency raised its 2025 total coffee production estimate by 2.4% to 56.54 million bags, signaling ample supplies entering the market as the season progresses.

Vietnamese Output Surge and Rising Inventories Weigh Heavy

Vietnam’s dominance in robusta production increasingly weighs on global robusta prices. The country’s National Statistics Office reported that 2025 coffee exports jumped 17.5% year-over-year to 1.58 million metric tons—substantial growth that adds to global supplies. Looking ahead, Vietnam’s production is projected to climb 6% to 1.76 million metric tons, or 29.4 million bags, marking a four-year high. The Vietnam Coffee and Cocoa Association forecasts that output could be as much as 10% higher in 2025/26 if favorable weather persists, underlining Vietnam’s growing influence over global robusta pricing.

This production surge coincides with inventory recoveries that further weigh on prices. ICE arabica inventories, which hit a 1.75-year low of 398,645 bags in November, bounced to 461,829 bags by mid-January. Similarly, robusta stocks fell to a one-year low in December but recovered to 4,609 lots last week. These inventory recoveries signal to traders that supply anxiety is easing, removing a key price support.

USDA’s 2025/26 Outlook: Production Gains vs. Tighter Supplies

The USDA’s Foreign Agriculture Service painted a nuanced picture in its December report. World coffee production is projected to increase 2% to a record 178.85 million bags for 2025/26, though the composition matters: arabica production will decline 4.7% to 95.5 million bags while robusta will surge 10.9% to 83.3 million bags. This structural shift—fewer arabicas, more robustas—aligns with current market weakness in robusta.

Brazil’s production, despite Conab’s recent optimism, is expected to fall 3.1% to 63 million bags in 2025/26, which could eventually support arabica values. Vietnam’s output is seen climbing 6.2% to a four-year high of 30.8 million bags, maintaining downside pressure on robusta. Ending stocks for the marketing year (October-September) will contract 5.4% to 20.15 million bags from 21.31 million bags, a modest tightening that provides limited price support.

The Balancing Act: When Supply Abundance Weighs on Values

Coffee prices today reflect the ongoing tension between near-term and structural forces. Heavy Brazilian rains and Vietnamese production records weigh on values through the supply abundance they represent. Yet smaller declines in global stockpiles and projected arabica production weakness suggest that price weakness may have limits. For now, the market is pricing in a world of sufficient supplies, tempering any bull case for prices in the near term.