Global Coffee Prices Face Pressure Amid Supply Surge and Weather Forecasts

The global coffee market experienced significant downward pressure in recent trading, with coffee prices sliding across both major varieties as traders reassessed the supply-demand balance. This selloff reflects a confluence of bearish factors including expanded production forecasts, rising inventories, and favorable weather conditions for growing regions. Understanding these market dynamics provides insight into where coffee prices may be headed in coming months.

Market Selloff: Arabica and Robusta Retreat on Latest Trading Data

Both arabica and robusta coffee futures declined sharply during recent sessions. March arabica contracts fell 3.845%, closing down 13.25 points and touching a 5.5-month low. March robusta futures dropped 1.58%, declining 66 points to hit a 3.5-week low. The weakness in both varieties signals that coffee prices are experiencing broad-based selling pressure rather than isolated weakness in a single market segment.

The retreat in coffee prices reflects traders’ concerns about adequate global supply, which has shifted market sentiment from bullish to cautious. This shift is particularly evident in robusta prices, which have proven more vulnerable to production increases from the world’s largest robusta producer.

Vietnam’s Coffee Surge: A Major Headwind for Robusta Prices

Vietnam’s substantial increase in coffee exports and production is proving to be a significant drag on robusta prices. According to data released in early January, Vietnam’s 2025 coffee exports jumped 17.5% year-over-year to 1.58 million metric tons, demonstrating the country’s expanding global market share.

Looking ahead to 2025/26, Vietnam’s coffee output is projected to climb 6% year-over-year to 1.76 million metric tons, or approximately 29.4 million bags—a 4-year high. Industry associations have indicated that output could rise as much as 10% higher than the previous crop year if weather conditions remain favorable. These production increases signal that coffee prices may continue facing downside pressure, particularly for robusta varieties, as additional Vietnamese supply flows into global markets.

Brazil’s Production and Weather: Competing Influences on Coffee Prices

Brazil, the world’s largest arabica producer, presents a mixed picture for coffee prices. On one hand, Brazil’s crop forecasting agency raised its 2025 coffee production estimate by 2.4% to 56.54 million bags in early December, suggesting ample supplies ahead. However, recent rainfall patterns have been below historical averages, which could support higher coffee prices by constraining near-term production potential.

Minas Gerais, Brazil’s critical coffee-growing region, received only 33.9 mm of rain during the week ended mid-January—just 53% of the historical average. Forecasts indicate steady rains are expected in the coming weeks, which would restore moisture levels and potentially ease supply concerns. This weather scenario has already weighed on coffee prices, as the market interpreted improved rainfall prospects as bullish for production.

Brazilian coffee exports also declined sharply in recent months, with total green coffee exports falling 18.4% to 2.86 million bags. Arabica exports fell 10% year-over-year while robusta exports plummeted 61%, suggesting that Brazilian supply may be tightening despite the higher production forecast.

Storage and Inventory Dynamics: Another Factor Pressuring Coffee Prices

The recovery in ICE-monitored coffee inventories has emerged as an additional bearish factor weighing on coffee prices. Arabica inventories fell to a 1.75-year low of 398,645 bags on November 20 but have since recovered to a 2.5-month high of 461,829 bags as of mid-January. Similarly, robusta inventories hit a 1-year low of 4,012 lots in December but rebounded to a 1.75-month high of 4,609 lots in recent trading.

The inventory recovery suggests that supply pressures are easing, which reduces the urgency among buyers and allows coffee prices to decline from recent elevated levels. Higher inventory levels typically indicate that shortages are being resolved, removing a key support mechanism for prices.

Global Production Forecasts Shape Coffee Prices Outlook

The USDA’s Foreign Agriculture Service projected in mid-December that global coffee production for 2025/26 will increase 2.0% year-over-year to a record 178.848 million bags. However, this aggregate forecast masks significant shifts between varieties: arabica production is expected to decline 4.7% to 95.515 million bags, while robusta production surges 10.9% to 83.333 million bags.

For major producers specifically, Brazil’s 2025/26 coffee production is forecast to decline 3.1% year-over-year to 63 million bags, potentially limiting supply from the world’s largest producer. Conversely, Vietnam’s output is projected to rise 6.2% year-over-year to 30.8 million bags, the highest in four years. These divergent trends suggest that while arabica prices may stabilize on tighter Brazilian supplies, robusta prices face continued pressure from Vietnamese expansion.

The USDA also forecasts that 2025/26 ending stocks will fall 5.4% to 20.148 million bags from 21.307 million bags in 2024/25, indicating a modest tightening in the global supply balance over the production year.

What Lies Ahead for Coffee Prices

The current environment presents mixed signals for coffee prices going forward. On one side, weather forecasts for increased Brazilian rainfall, expanding global production, and recovering inventories all suggest that coffee prices may remain under pressure in the near term. On the other side, declining Brazilian exports, tighter arabica supplies, and global inventory levels that remain historically modest could eventually provide a floor for coffee prices if conditions deteriorate.

Traders monitoring coffee prices should pay close attention to Brazilian weather developments, weekly ICE inventory reports, and monthly export data from Brazil and Vietnam—all of which will influence whether coffee prices find fresh support or continue their recent downtrend.