Abundant Global Coffee Supply Weighs on Futures as EUDR Delay Extends Import Window

Market Retreat Signals Supply Abundance

Arabica and robusta coffee futures are encountering selling pressure as market participants reassess global availability prospects. March arabica contracts declined 1.38% to settle with a -5.30 point loss, while January robusta futures fell 1.03% with a -47 point drop. The principal catalyst stems from the European Parliament’s approval of a one-year postponement to the deforestation regulation (EUDR), effectively extending the timeline for EU nations to source agricultural commodities from regions experiencing active deforestation across Africa, Indonesia, and South America.

Regulatory Reprieve Boosts Supply Expectations

The postponement of the EU Deforestation Regulation removal creates breathing room for importers dependent on coffee shipments from high-deforestation regions. This regulatory extension signals that abundant supplies will likely persist, undermining near-term price support. The delayed implementation of stricter import standards means continued flow of coffee beans into European markets, alleviating supply concerns that might otherwise support prices.

Weather Constraints Offer Limited Price Support

Despite the bearish supply backdrop, coffee markets retain some technical support from adverse meteorological conditions threatening production capacity. Brazil’s Minas Gerais region, representing the nation’s principal arabica-growing area, experienced insufficient moisture during the week ending November 21, recording merely 26.4 mm of precipitation against a historical average of 53.9 mm. This precipitation shortfall—only 49% of normal—raises dryness-related output concerns for the coming season.

Vietnam’s robusta sector faces alternative weather challenges, with heavy rainfall forecasted for Dak Lak province, the country’s dominant coffee-growing area, where delayed harvests could impact near-term supplies. However, these localized weather disruptions appear insufficient to counteract the broader abundant supply narrative.

Inventory Dynamics Reveal a Conflicting Picture

Coffee storage levels present a nuanced backdrop to the price decline. ICE arabica inventories reached a 1.75-year low of 398,645 bags last Thursday, while robusta stockpiles fell to a 6.25-month minimum of 4,911 lots. These inventory compressions stem partially from U.S. tariff implementations on Brazilian coffee imports, which prompted American purchasers to abandon new purchasing commitments for Brazilian beans.

U.S. coffee imports from Brazil contracted dramatically, with August-October shipments declining 52% year-over-year to 983,970 bags during the period when President Trump’s tariffs took effect. This import reduction—approximately one-third of American unroasted coffee sourcing—explains the recent inventory tightening in U.S. warehouses.

However, this localized tightness failed to sustain price momentum after President Trump signed an executive order exempting Brazilian agricultural products, including a 40% tariff rate on coffee, thereby removing the immediate supply constraint that had supported futures prices.

Production Forecasts Signal Abundant Availability Ahead

Longer-term supply projections overwhelmingly support the abundant coffee narrative. StoneX’s latest forecast predicts Brazil will generate 70.7 million bags in the 2026/27 season, including 47.2 million bags of arabica—representing a 29% year-over-year expansion. This substantial production increase reinforces expectations for plentiful global supplies.

Vietnam, commanding the world’s largest robusta production capacity, demonstrated robust export momentum. National statistics revealed that January-October 2025 coffee exports climbed 13.4% year-over-year to 1.31 million metric tons. Vietnam’s 2025/26 production projection indicates a 6% year-over-year increase to 1.76 million metric tons, or 29.4 million bags—marking a 4-year high. Industry association forecasts suggest potential 10% production increases if favorable weather patterns persist.

Global Supply Framework Tightens Marginally

International Coffee Organization data from November 7 noted that global coffee exports during the current marketing year (October-September) declined 0.3% year-over-year to 138.658 million bags. While this marginal contraction might provide modest support, the USDA’s Foreign Agriculture Service maintains that world coffee production will increase 2.5% year-over-year to a record 178.68 million bags in 2025/26.

The USDA’s sector breakdown projects arabica production will decline 1.7% to 97.022 million bags, while robusta output will surge 7.9% to 81.658 million bags. Brazil’s output is expected to rise 0.5% year-over-year to 65 million bags, while Vietnam’s production is projected to reach 31 million bags—a 6.9% year-over-year increase and 4-year maximum.

Inventory Projections Support the Abundant Narrative

Ending inventory forecasts underscore the abundant supply outlook. FAS projects that 2025/26 ending stocks will climb 4.9% to 22.819 million bags from 2024/25 levels of 21.752 million bags. This inventory accumulation reinforces the abundant supply conditions pressuring prices.

Near-Term Outlook Remains Uncertain

Coffee price dynamics currently reflect competing forces: abundant global supplies and inventory build prospects weigh against localized weather concerns and temporary import constraints. The balance between these factors will likely determine whether current price levels attract buyers or encourage further weakness in coming sessions.