Weather Shifts Reshape Global Coffee Market Dynamics as Brazil Faces Moisture

Arabica and robusta coffee futures experienced distinct directional moves today, with March arabica contracts retreating 1.30 points (-0.36%) while March robusta declined 7 points (-0.17%). The market’s reversal from early gains stems from meteorological updates suggesting increased precipitation across Brazil’s primary coffee-producing regions in the coming week—a development that threatens to ease production concerns that had supported prices.

Brazil’s Rainfall Pattern Shifts Market Sentiment

The elevation in rain prospects directly counters recent bullish momentum. Just last week, arabica surged to one-month highs following reports of inadequate moisture in Brazil. According to Somar Meteorologia’s latest assessment, Minas Gerais—the world’s largest arabica coffee-growing state—accumulated only 26.5 millimeters of precipitation during the January 9 reporting period, representing just 29% of the typical historical rainfall for this timeframe.

Paradoxically, while near-term weather forecasts now suggest normalization, longer-term production expectations remain robust. Brazil’s crop forecasting agency Conab elevated its 2025 total coffee production estimate by 2.4% in December, projecting 56.54 million bags compared to September’s 55.20 million bag forecast. This upward revision signals confidence in overall yield prospects despite short-term rainfall variability.

Inventory Movements Present Mixed Signals

Recent ICE warehouse data reveals competing pressures on market psychology. Arabica storage levels touched a 1.75-year low of 398,645 bags on November 20—a technically supportive development—though subsequent recoveries to 461,829 bags by late December suggest stabilization. Similarly, robusta inventories bottomed at 4,012 lots on December 10 before rebounding to 4,278 lots weeks later, indicating potential supply balance rather than acute scarcity.

Vietnam’s Production Surge Pressures Robusta Dynamics

Production trends from Vietnam compound bearish sentiment for the robusta segment. The nation’s coffee exports surged 17.5% year-over-year to 1.58 million metric tons according to recent government statistics, extending its position as the world’s premier robusta supplier. Forward projections prove even more daunting: 2025/26 Vietnamese output is anticipated to climb 6% year-over-year to 1.76 million metric tons (29.4 million bags), matching 4-year production records. Industry bodies, including the Vietnam Coffee and Cocoa Association, have suggested potential output gains of 10% if meteorological conditions remain favorable.

Global Supply Expansion Outpaces Demand

The USDA’s Foreign Agriculture Service delivered comprehensive production forecasts on December 18, projecting world coffee output in 2025/26 will expand 2.0% year-over-year to a record 178.848 million bags. However, this aggregate gain masks divergent regional trajectories: arabica production faces a 4.7% year-over-year contraction to 95.515 million bags while robusta production surges 10.9% to 83.333 million bags.

Brazil specifically represents the arabica headwind, with FAS projecting a 3.1% year-over-year production decline to 63 million bags. Conversely, Vietnam’s output is forecast to climb 6.2% year-over-year, reaching 30.8 million bags—a 4-year elevated level. These divergent trajectories underpin the current market bifurcation between arabica and robusta complex dynamics.

Ending stocks present additional bearish implications. FAS estimates 2025/26 conclusion inventory positions will contract 5.4% to 20.148 million bags from 2024/25’s 21.307 million bags, suggesting reduced market tightness despite elevated production from Vietnam and other robusta-focused origins.

The International Coffee Organization’s November 7 assessment noted that global coffee exports during the current marketing year declined marginally by 0.3% year-over-year to 138.658 million bags, signaling that production gains have not yet translated into export acceleration—a potential constraint on near-term supply relief.