Global Coffee Supply Surge Reshapes Market Dynamics as Brazilian Weather Improves

Production Outlook Pressures Arabica and Robusta Markets

The coffee futures market experienced significant downward pressure on Monday, with March arabica contracts closing down 9.00 points (-2.44%), while January robusta contracts fell 80 points (-1.94%). Both contracts extended losses from the previous Friday, marking arabica’s lowest point in three weeks and robusta’s weakest performance over a four-month span. The primary driver behind these declines stems from expanding global coffee supplies combined with improved weather conditions in major producing regions.

Brazilian Weather Eases Production Concerns

Brazil’s coffee-growing regions received substantial rainfall during the week ending December 12, with Minas Gerais—the country’s largest arabica coffee production center—recording 79.8 mm of precipitation, representing 155% of the historical average according to Somar Meteorologia. This moisture surge has directly influenced coffee plant growth stages, creating favorable conditions for crop development. Climatempo forecasted that “intense and persistent rainfall” would continue throughout the week in Brazil’s coffee-growing zones, further easing previous drought-related anxieties.

Brazil’s official crop agency, Conab, responded to improved conditions by increasing its 2025 coffee production forecast by 2.4%, raising the estimate to 56.54 million bags from September’s projection of 55.20 million bags. This upward revision reflects confidence in robust coffee plant growth stages and harvest potential.

Vietnamese Supply Expansion Intensifies Competitive Pressures

Vietnam’s export data reveals another significant supply headwind. The National Statistics Office reported that November coffee exports surged 39% year-over-year to 88,000 metric tons, while January-through-November exports climbed 14.8% year-over-year to 1.398 million metric tons. Looking ahead, Vietnam’s 2025/26 coffee production is projected to reach 1.76 million metric tons (29.4 million bags), up 6% annually and marking a four-year production high. The Vietnam Coffee and Cocoa Association indicated that output could reach 10% above prior-year levels if weather conditions remain favorable, further amplifying robusta supply pressures.

Global Production Forecasts Paint Supply-Abundant Picture

The USDA’s Foreign Agriculture Service (FAS) projects that world coffee production in 2025/26 will increase 2.5% year-over-year to a record 178.68 million bags. While arabica production is expected to decline 1.7% to 97.022 million bags, robusta supplies will surge 7.9% to 81.658 million bags. FAS estimates Brazil’s 2025/26 output at 65 million bags (up 0.5% annually) and Vietnam’s at 31 million bags (up 6.9% annually, also a four-year high).

The International Coffee Organization (ICO) reported in November that global coffee exports for the current marketing year (October-September) declined marginally 0.3% year-over-year to 138.658 million bags, though this modest contraction pales against production growth expectations.

Inventory Trends Present Mixed Signals

ICE-monitored arabica inventories fell to a 1.75-year low of 398,645 bags on November 20 but subsequently recovered to 426,523 bags (a five-week high) by December 5. Robusta inventories hit an 11.5-month low of 4,012 lots last Wednesday. These inventory fluctuations suggest underlying tightness, yet forward production expectations appear sufficiently robust to pressure prices downward.

The FAS projects that 2025/26 ending coffee stocks will climb 4.9% to 22.819 million bags from 21.752 million bags in 2024/25, reinforcing the outlook for ample supplies.

Export Dynamics Reveal Shifting Trade Patterns

Brazil’s green coffee exports in November fell 27% year-over-year to 3.3 million bags, according to exporter group Cecafe. However, this decline reflects temporary trade disruptions rather than supply constraints. US coffee imports from Brazil during August-October (when Trump-era tariffs were in effect) dropped 52% from year-earlier levels to 983,970 bags. Although those tariffs have since been reduced, US coffee inventories remain constrained, potentially supporting limited upside for prices.

Market Outlook: Supply Growth Dominates Price Discovery

The convergence of increased Brazilian production, expanding Vietnamese output, improved weather conditions supporting coffee plant growth stages, and rising global supply projections has created a bearish environment for both arabica and robusta prices. While shrinking ICE inventories provide temporary support and eased US tariffs may gradually rebuild American demand, the structural oversupply trajectory appears likely to maintain downward pressure on commodity prices through the near term.