Arabica Coffee Market Faces Mixed Pressures Amid Global Supply Shifts

The arabica coffee market delivered a complex picture on Thursday, with March arabica futures closing lower while robusta prices moved higher, reflecting the divergent weather patterns and supply dynamics across the world’s two dominant coffee-growing regions. March arabica contracts fell 5.50 points, or 1.57%, while March robusta futures gained 34 points, up 0.82%, as investors weighed conflicting signals from Brazil and Vietnam.

Brazil’s Output Surge Weights on Arabica Prices Despite Export Decline

Arabica prices faced downward pressure this week as weather forecasts predicted sustained precipitation across Minas Gerais, Brazil’s primary coffee production zone, over the coming days. This rainfall pattern stands in contrast to below-average moisture conditions observed earlier. Somar Meteorologia reported that Minas Gerais received 33.9 mm of rain during the week ending January 16, representing just 53% of historical averages, yet fresh forecasts signal a shift toward wetter conditions ahead.

The broader supply picture presents a mixed narrative for arabica. Brazil’s crop forecasting agency, Conab, elevated its total 2025 coffee production forecast by 2.4% to 56.54 million bags on December 4, up from an earlier September projection of 55.20 million bags. This upward revision signals ample global supply ahead. However, Brazil’s green coffee export figures tell a different story. Cecafe reported that Brazil’s December green coffee exports declined 18.4% to 2.86 million bags, with arabica-specific shipments dropping 10% year-over-year to 2.6 million bags. This contraction in export volumes provided some support to prices despite the higher production estimates.

Vietnam’s Robusta Surge Drives Divergent Price Patterns

Robusta coffee moved in the opposite direction, posting gains on expectations of limited rainfall in Vietnam’s Central Highlands over the next 10 days. Vietnam’s expanding output and exports are reshaping the global robusta market. Vietnam’s 2025 coffee exports jumped 17.5% year-over-year to 1.58 million metric tons on January 5, according to the country’s National Statistics Office. Production is projected to climb 6% year-over-year to 1.76 million metric tons, or 29.4 million bags, marking a four-year high. The Vietnam Coffee and Cocoa Association reinforced this outlook on October 24, forecasting that 2025/26 output could reach 10% above the prior crop year if weather conditions remain favorable.

This robust Vietnamese supply has weighed on robusta prices despite recent support from weather concerns. As the world’s largest robusta producer, Vietnam’s expanding harvests signal abundant supply in the near term.

Global Inventory Recovery and Production Forecasts Shape Outlook

Exchange-monitored inventories present a nuanced picture for both arabica and coffee prices more broadly. ICE 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, ICE robusta coffee inventories declined to a one-year low of 4,012 lots on December 10 but recovered to a 1.75-month high of 4,609 lots by last Friday. The rebuilding of these stockpiles signals sufficient supply availability and exerts downward pressure on both arabica and robusta futures.

On the production front, the USDA’s Foreign Agriculture Service painted a picture of global output expansion. In its December 18 bi-annual forecast, FAS projected world coffee production in 2025/26 will grow 2.0% year-over-year to a record 178.848 million bags. However, this aggregate growth masks important regional shifts: arabica production is projected to fall 4.7% to 95.515 million bags, while robusta output surges 10.9% to 83.333 million bags. Brazil’s 2025/26 production is forecast to decline 3.1% year-over-year to 63 million bags, while Vietnam’s output is projected to rise 6.2% year-over-year to a four-year high of 30.8 million bags.

The International Coffee Organization reported on November 7 that global coffee exports for the current marketing year fell 0.3% year-over-year to 138.658 million bags, suggesting tightening trade flows despite ample production. FAS forecasts that 2025/26 ending stocks will compress 5.4% to 20.148 million bags from 21.307 million bags in 2024/25, indicating gradual supply normalization.

The outlook for arabica coffee hinges on the balance between Brazil’s elevated production and exports, Vietnam’s expanding robusta dominance, and global inventory levels. Weather developments in both regions will remain critical in the coming weeks.