Global Coffee Supply Surge Puts Fresh Pressure on Market Prices and Futures Quotes

The coffee market is facing intensifying headwinds as improving supply prospects from major producing regions weigh heavily on both arabica and robusta quotes. March arabica futures declined marginally by 0.05 points (0.01%), while January robusta contracts dropped 14 points (0.37%) in recent trading. Despite recovering from two-week lows following a dollar weakening that sparked modest short covering, the underlying trend points toward prolonged price pressure driven by expanding global coffee production.

Record Production Forecasts Signal Abundant Supply Ahead

The International Coffee Organization’s most recent assessment revealed that global coffee exports for the current marketing year (October-September) fell just 0.3% year-over-year to 138.658 million bags—a relatively stable export environment that masks brewing supply-side concerns. The USDA’s Foreign Agriculture Service projects more meaningful expansion ahead, forecasting world coffee production will climb 2.5% year-over-year to a record 178.68 million bags in 2025/26. This record output masks a critical divergence: arabica production is expected to decline 1.7% to 97.022 million bags, while robusta output surges 7.9% to 81.658 million bags.

Brazil’s Expanding Harvests and Favorable Weather Conditions

Brazil, responsible for roughly one-third of global supplies, is positioned to harvest substantially more coffee. Conab, Brazil’s official crop forecasting agency, elevated its 2025 production estimate by 2.4% to 56.54 million bags in early December, up from a September projection of 55.20 million bags. This upward revision reflects persistent rainfall across coffee-growing regions—precisely the weather pattern most favorable for plant development. Meteorological agencies reported “intense and persistent rainfall” continuing through December, while Minas Gerais, the nation’s largest arabica-producing state, received 79.8 mm of precipitation during the week ended December 12, representing 155% of the historical average.

A weaker Brazilian real, which fell to a 4.5-month low against the dollar, compounds pricing pressure by incentivizing coffee producers to accelerate export sales. However, november coffee exports tell a different story: Cecafe reported that Brazil’s green coffee shipments contracted 27% year-over-year to 3.3 million bags last month, suggesting export momentum may be moderating despite currency weakness.

Vietnam’s Robusta Dominance and Production Growth

Vietnam, the world’s largest robusta producer, is pushing output to fresh highs. The country’s 2025/26 coffee production is projected to increase 6% year-over-year to 1.76 million metric tons, equivalent to 29.4 million bags—a four-year peak. Vietnam’s Coffee and Cocoa Association projected output could climb as much as 10% higher than the prior crop year if weather patterns remain supportive. November export data underscores the supply strength: Vietnam’s coffee exports jumped 39% year-over-year to 88,000 MT in November alone, with January-November cumulative shipments rising 14.8% year-over-year to 1.398 million metric tons.

The robust robusta supply surge is particularly bearish for coffee quotes, as the expansion in Vietnam’s output directly pressures global robusta inventory and pricing dynamics.

Inventory Dynamics and Tariff-Related Demand Shifts

ICE-monitored arabica coffee inventories have whipsawed recently, declining to a 1.75-year low of 398,645 bags on November 20 before recovering to 426,938 bags by mid-week. Robusta inventories hit an 11.5-month low of 4,012 lots last Wednesday, suggesting some support from tightening stockpiles—a rare bullish signal amid broader supply abundance.

U.S. import dynamics have shifted meaningfully following tariff policy changes. From August through October, when elevated tariffs on Brazilian coffee were in effect, American purchases of Brazilian coffee plummeted 52% from the same 2024 period to just 983,970 bags. While tariffs have since been reduced, U.S. coffee inventories remain historically tight, suggesting limited near-term demand recovery even as tariff headwinds ease.

Forward-Looking Supply Outlook and Market Implications

Looking ahead, ending coffee stocks are expected to climb 4.9% to 22.819 million bags in 2025/26 from 21.752 million bags in the current crop year—another indicator of expanding global abundance. FAS forecasts position Brazil’s 2025/26 production at 65 million bags (up 0.5% year-over-year) and Vietnam’s output at a four-year high of 31 million bags (up 6.9% year-over-year).

The convergence of record global production forecasts, favorable Brazilian weather patterns, robust Vietnamese export momentum, and rising ending stock projections collectively suggest coffee prices will face sustained pressure. While recent dollar weakness provided temporary relief for coffee quotes and modest short covering supported a technical bounce, the fundamental backdrop—characterized by ample supplies and minimal demand surprises—appears likely to keep downside risks prevalent for coffee futures through the near to intermediate term.