Coffee Market Turns Mixed as Brazilian Rainfall Reshapes Supply Dynamics

Coffee futures posted a choppy session on Friday, with arabica settling sharply lower while robusta held relatively steady. March arabica contracts dropped 4.45 points (-1.29%), reaching a fresh 4-month trough, whereas January robusta edged up 4 points (+0.11%). The divergence reflects shifting supply narratives across major producing regions.

Brazil’s Rain Boost Pressures Arabica

Heavy precipitation across Brazil’s coffee belt has dramatically altered market sentiment. Climatempo forecasted “intense and persistent rainfall” throughout the week in key growing zones, while Somar Meteorologia reported that Minas Gerais—home to Brazil’s largest arabica production—received 79.8 mm of rain in the week ending December 12, exceeding the historical average by 55%.

This moisture-rich outlook has erased earlier drought concerns. Conab, Brazil’s official crop forecasting agency, subsequently raised its 2025 coffee production estimate by 2.4% to 56.54 million bags, up from September’s projection of 55.20 million bags. The improved supply picture has become a significant headwind for arabica pricing.

Vietnam’s Robusta Supply Surge Weighs on Prices

Robusta faces its own supply pressures from Southeast Asia’s largest producer. Vietnam’s coffee exports surged 39% year-over-year in November alone, reaching 88,000 MT, with January-through-November shipments climbing 14.8% y/y to 1.398 million MT. The Vietnam Coffee and Cocoa Association projected 2025/26 output will reach 1.76 million MT—a 4-year high—representing a 6% year-over-year increase.

This abundant supply outlook has kept robusta prices under persistent selling pressure throughout the quarter.

Inventory Dynamics and Global Production Outlook

Storage levels paint a complex picture. ICE-monitored arabica inventories hit a 1.75-year low of 398,645 bags on November 20 before recovering to 439,257 bags by Friday. Robusta stocks similarly tightened to an 11.5-month low of 4,012 lots last Wednesday, offering some price support.

However, the broader global picture suggests ample supplies ahead. The USDA’s Foreign Agriculture Service projects 2025/26 world coffee production will rise 2.0% to a record 178.848 million bags. Arabica output is expected to decline 4.7% to 95.515 million bags, while robusta production climbs 10.9% to 83.333 million bags. Ending stocks for the season are forecast to fall 5.4% to 20.148 million bags.

Brazil’s Export Weakness Creates Support

A bright spot for arabica emerges from export data. Exporter group Cecafe reported that Brazil’s November green coffee exports fell 27% year-over-year to 3.3 million bags, suggesting tighter near-term availability even as production estimates climb. This export slowdown, combined with tightened US import demand from tariff disruptions, has provided modest support for arabica values despite the headline supply optimism.

The coffee market remains caught between conflicting forces: improved crop conditions and rising global production forecasts on one side, and structural tightness in near-term availability on the other.