Global Coffee Supply Surge Reshapes Market Dynamics as Brazil and Vietnam Boost Output

The coffee futures market is grappling with mounting supply pressures despite recent price stabilization efforts. March arabica contracts dropped 0.05 points (down 0.01%), while January robusta futures fell 14 points (-0.37%), as both benchmarks have declined sharply over the past fortnight and hit four-month lows today. A temporary rebound materialized as dollar weakness triggered modest short covering, yet the fundamental outlook remains challenged by an improving global supply picture.

Weather Boom in Brazil Eases Production Concerns

Brazil’s coffee sector is benefiting from exceptionally favorable rainfall patterns that have alleviated crop development worries. Climatempo forecasted “intense and persistent rainfall” throughout this week in major coffee-growing regions, signaling ample moisture for plant development. Data from Somar Meteorologia revealed that Minas Gerais, responsible for the bulk of Brazil’s arabica output, received 79.8 mm of precipitation during the week ending December 12—approximately 155% of the historical norm.

This weather favorability has emboldened supply expectations. Brazil’s crop agency Conab raised its 2025 production forecast by 2.4% to 56.54 million bags, up from September’s estimate of 55.20 million bags. These upward revisions have weighed heavily on market sentiment, particularly for arabica futures.

Brazilian Currency Weakness Fuels Export Momentum

The depreciation of the Brazilian real to a 4.5-month low against the dollar is amplifying export incentives for Brazilian coffee producers. A weaker currency makes exports more attractive for growers, potentially flooding international markets with increased shipments. This dynamic adds another bearish layer to the current pricing environment.

However, some recent export data offered limited support for arabica prices. Brazil’s green coffee exports declined 27% year-over-year in November, reaching just 3.3 million bags according to the Cecafe exporter group—a sign that tariff uncertainties had previously dampened sales activity.

Vietnam Surges Ahead as Robusta Production Peaks

Vietnam’s coffee sector is operating at full capacity, with the National Statistics Office reporting a 39% year-over-year jump in November coffee exports to 88,000 MT. Year-to-date through November, cumulative exports climbed 14.8% y/y to 1.398 million MT, underscoring Vietnam’s dominance as the world’s largest robusta producer.

Looking ahead, Vietnam’s 2025/26 production is projected to reach 1.76 MMT (29.4 million bags), representing a 6% year-over-year increase and a four-year peak. The Vietnam Coffee and Cocoa Association indicated that output could climb as much as 10% above the prior season if weather remains favorable—a scenario that would further saturate the global robusta market and pressure prices.

ICE Inventories Stabilize but Remain Vulnerable

Arabica inventory levels have shown some volatility but remain historically constrained. ICE-monitored arabica stocks tumbled to a 1.75-year low of 398,645 bags on November 20, though they rebounded to 426,938 bags by Wednesday. Robusta inventory positions deteriorated to an 11.5-month nadir of 4,012 lots last Wednesday, reflecting tight balances despite elevated production forecasts.

US coffee inventory tightness persists as American buyers previously shunned Brazilian purchases during the tariff period. US imports of Brazilian coffee from August through October plummeted 52% year-over-year to just 983,970 bags. While recent tariff relief may encourage renewed purchasing, domestic US stocks remain under pressure.

Global Supply Outlook Dominates Price Narrative

The International Coffee Organization reported on November 7 that global coffee exports for the current marketing year (October-September) contracted 0.3% year-over-year to 138.658 million bags, a modest tightening signal. However, this barely offset broader supply expansion trends.

The US Department of Agriculture’s Foreign Agriculture Service projects that world coffee production in 2025/26 will surge 2.5% year-over-year to a record 178.68 million bags. While arabica production is forecast to dip 1.7% to 97.022 million bags, robusta output is expected to accelerate 7.9% to 81.658 million bags—a composition shift that disadvantages quality-focused markets including european coffee consumers and processors.

Brazil’s 2025/26 production is anticipated to edge up 0.5% to 65 million bags, while Vietnam’s output is projected to climb 6.9% to a four-year high of 31 million bags. Crucially, FAS forecasts that 2025/26 ending stocks will balloon 4.9% to 22.819 million bags from 21.752 million bags in 2024/25—a substantial inventory buildup that reinforces downside pressure on prices across all major coffee markets globally.

The convergence of robust supply growth, adequate weather conditions, and rising end-of-season stocks suggests that coffee prices will continue navigating a structurally challenged environment in the near term.