Supply Glut Weighs on Coffee Quotes Amid Production Surge

Coffee quotes are trading in the red today, with March arabica slipping 2.43% to mark its lowest point in two weeks, while January robusta fell 1.75% to touch a 2.25-month bottom. The downward momentum reflects mounting concerns over a global production surplus that threatens to keep prices under sustained pressure through the coming season.

Production Boom Outpaces Demand Expectations

The coffee market is bracing for a significant supply surge. Brazil’s agricultural authority Conab increased its 2025 coffee production forecast by 2.4%, now projecting 56.54 million bags—a notable jump from September’s 88.20 million bag estimate. Looking ahead to the 2026/27 marketing year, StoneX pegged Brazilian output at 70.7 million bags, with arabica accounting for 47.2 million—representing a 29% annual surge.

Vietnam, the world’s robusta powerhouse, is equally significant. The country’s coffee exports climbed 39% year-over-year in November to 88,000 MT, while cumulative January-to-November shipments reached 1.398 million MT, up 14.8% annually. The USDA projects Vietnam’s 2025/26 output will reach 31 million bags, a 6.9% increase and 4-year high. Global production forecasts point to a record 178.68 million bags in 2025/26, though arabica production is expected to dip 1.7% to 97.022 million bags while robusta climbs 7.9% to 81.658 million bags.

Policy Delays Amplify Supply Concerns

A critical headwind for coffee prices emerged when the European Parliament approved a one-year delay to its deforestation regulation (EUDR) last week. The postponement permits continued imports of coffee and other commodities from deforestation-affected regions in Africa, Indonesia, and South America, effectively cementing supply abundance in the pipeline.

ICE Coffee Quotes Show Mixed Inventory Signals

The inventory picture presents a nuanced backdrop for coffee quotes. ICE arabica stocks plunged to a 1.75-year low of 398,645 bags on November 20, though they recovered slightly to 426,523 bags last Friday. ICE robusta inventories hit an 11.5-month low of 4,021 lots today. US tariffs on Brazilian coffee imports have accelerated this drawdown—American purchases from Brazil fell 52% between August and October compared to the prior year, dropping to 983,970 bags as importers canceled new contracts.

Weather and Global Trends: Limited Support

Brazil’s drought conditions provide modest price support. Minas Gerais, the nation’s premier arabica region, received only 11 mm of rain during the week ending December 5—just 17% of historical norms. Meanwhile, the International Coffee Organization reported October-September marketing year exports fell 0.3% year-over-year to 138.658 million bags, signaling tighter near-term flows.

Despite these constructive elements, the overwhelming weight of production growth and policy accommodation keeps coffee quotes vulnerable to additional selling pressure as traders position for a supply-rich 2025/26 season.