Arabica and Robusta Coffee Markets Shift Lower Amid Ample Supply Signals

Coffee futures retreated notably in recent trading sessions, with March arabica coffee closing down 2.30 points (-0.66%) and January robusta coffee declining 25 points (-0.66%) on Thursday. Over the past fortnight, both contracts have experienced a sharp pullback, settling at four-month lows. The selloff reflects a confluence of bearish factors centered on positive crop development and ample supply projections.

Brazilian Rain Eases Crop Concerns

Brazil’s coffee-growing regions received exceptional rainfall that has fundamentally shifted market sentiment. Climatempo’s Monday forecast indicates intense and persistent precipitation will continue this week across major growing areas. More significantly, Minas Gerais—Brazil’s largest arabica producer—accumulated 79.8 mm of rain during the week ending December 12, representing 155% of the historical average. These positive weather conditions have alleviated previous drought concerns and suppressed bullish quotes surrounding crop viability.

Currency Weakness Fuels Export Pressure

The Brazilian real’s depreciation to a 4.5-month low against the dollar has compounded downward pressure on prices. A weaker real incentivizes Brazilian coffee exporters to accelerate sales, flooding markets with additional supply. This currency dynamic reinforces the bearish tone that dominated trading.

Production Forecasts Signal Record Output

Brazil’s crop forecasting agency Conab raised its 2025 production estimate by 2.4% to 56.54 million bags in December, up from September’s projection of 55.20 million bags. Looking ahead, the USDA Foreign Agriculture Service forecasts Brazil’s 2025/26 output will increase 0.5% year-over-year to 65 million bags. Global coffee production is expected to reach a record 178.68 million bags in 2025/26—a +2.5% year-over-year increase—with robusta expanding 7.9% to 81.658 million bags and arabica declining 1.7% to 97.022 million bags.

Vietnamese Supply Surge Pressures Robusta

Vietnam’s November coffee exports jumped 39% year-over-year to 88,000 MT, with January-through-November shipments rising 14.8% to 1.398 MMT. The country’s 2025/26 production is projected to climb 6% annually to 1.76 MMT (29.4 million bags), marking a four-year high. The Vietnam Coffee and Cocoa Association suggested output could reach 10% above the previous crop year if weather remains favorable. As the world’s largest robusta producer, increased Vietnamese supplies have created substantial headwinds for robusta quotations.

Inventory Adjustments Provide Limited Support

ICE-monitored arabica inventories hit a 1.75-year low of 398,645 bags on November 20 before recovering to 432,672 bags by Thursday. Robusta stockpiles fell to an 11.5-month low of 4,012 lots last Wednesday. While tighter inventory conditions provided some positive signals for prices, the broader supply outlook has overshadowed these supportive factors.

US Import Dynamics and Global Trade Adjustments

American coffee buyers significantly reduced Brazilian purchases during the tariff period—August through October shipments dropped 52% year-over-year to 983,970 bags. Though US tariffs have since been eased, US coffee inventories remain constrained, potentially limiting near-term import acceleration. Meanwhile, global coffee exports for the current marketing year (October-September) fell marginally by 0.3% to 138.658 million bags, suggesting measured export activity despite ample production projections.

The International Coffee Organization and USDA FAS projections indicate 2025/26 ending stocks will climb 4.9% to 22.819 million bags, reinforcing expectations of well-supplied markets ahead. Together, these fundamentals have created an environment where positive crop development and production forecasts have outweighed inventory constraints, driving recent price weakness.