Coffee Market Rebounds After Technical Bottom as Oversupply Concerns Mount

March arabica futures climbed 2.95 points (+1.04%) while March robusta coffee advanced 53 points (+1.44%) on Wednesday’s trading session. This technical bounce marks a recovery from recent weakness, with arabica rebounding from a 7.25-month low and robusta bouncing off a 6-month bottom. The rally reflects classic short-covering activity in coffee futures contracts after prices had been pushed into deeply depressed technical levels.

The coffee complex had faced significant headwinds over the preceding three weeks as multiple supply factors weighed on sentiment. Data released by Conab, Brazil’s official crop forecasting agency on February 5, revealed that the nation’s 2026 coffee production is projected to surge 17.2% year-over-year to a record 66.2 million bags. This unprecedented output includes a 23.2% increase in arabica production to 44.1 million bags and a 6.3% jump in robusta supplies to 22.1 million bags.

Supply Pressures Intensify from Multiple Regions

Vietnam, the world’s dominant robusta producer, has added to downward price pressure through soaring exports. The country’s National Statistics Office reported on February 6 that January coffee shipments jumped 38.3% year-over-year to 198,000 metric tons, with full-year 2025 exports climbing 17.5% to 1.58 million metric tons. Looking ahead, Vietnam’s 2025/26 production is projected to rise 6% year-over-year to 1.76 million metric tons—representing a four-year production high.

Brazil’s surge in coffee output has been supported by favorable weather, with adequate rainfall boosting crop prospects. Somar Meteorologia reported that Minas Gerais, Brazil’s largest arabica-growing region, received 72.6 millimeters of rain during the week ending February 6, equivalent to 113% of historical averages.

Global Inventory Dynamics and Production Forecasts

The International Commodities Exchange reported a concerning recovery in monitored coffee stocks. Arabica inventories fell to a 1.75-year low of 396,513 bags on November 18 but rebounded to a 3.25-month peak of 461,829 bags by January 7. Similarly, robusta coffee stocks declined to a 13-month low of 4,012 lots on December 10 before recovering to a 2-month high of 4,662 lots on January 26.

The USDA’s Foreign Agriculture Service, in its December 18 bi-annual assessment, projected that world coffee production in 2025/26 will increase 2.0% year-over-year to a record 178.848 million bags. The forecast calls for a 4.7% decline in arabica production to 95.515 million bags offset by a 10.9% increase in robusta production to 83.333 million bags.

Offsetting Factors and Market Outlook

On a more supportive note for prices, Brazil’s Trade Ministry reported that January coffee exports declined 42.4% year-over-year to 141,000 metric tons, suggesting tighter near-term supplies from the world’s largest producer. Additionally, Colombia’s coffee production fell sharply, declining 34% year-over-year to 893,000 bags in January according to the National Federation of Coffee Growers, providing some support to arabica valuations.

While global coffee supplies are projected to increase modestly, the International Coffee Organization indicated in November that current marketing year exports fell 0.3% year-over-year. The FAS projects 2025/26 ending stocks will decline 5.4% to 20.148 million bags from 21.307 million bags in 2024/25, suggesting tightening conditions later in the season as production increases face demand challenges.