Global Coffee Supply Expansion Triggers Fresh Weakness in Coffee Quotes

The latest coffee quotes reflect mounting pressure from improving production prospects across major growing regions. March arabica futures dipped -0.05 points (-0.01%), while January robusta contracts retreated -14 points (-0.37%), marking 4-month floor levels before paring losses on dollar weakness. Despite intraday recovery, the market remains under siege from multiple supply-side headwinds.

Rainfall Abundance Reshapes Brazil’s Outlook

Brazil’s coffee production trajectory took a bullish turn for consumers and bearish twist for producers following recent meteorological developments. Climatempo’s Monday update flagged “intense and persistent rainfall” across coffee-growing states this week, while Somar Meteorologia documented that Minas Gerais—accounting for Brazil’s largest arabica output—absorbed 79.8 mm of precipitation during the week ending December 12, representing 155% of the long-term median. These moisture conditions have substantially reduced drought concerns that previously underpinned price support.

Adding to downward momentum, Brazil’s official crop forecasting body Conab lifted its 2025 production projection by 2.4% to 56.54 million bags from the prior September forecast of 55.20 million bags. The real’s depreciation to 4.5-month lows against the greenback simultaneously encourages Brazilian exporters to accelerate sales, compounding selling pressure on coffee quotes.

Vietnam’s Export Surge Intensifies Robusta Pressure

Robusta contracts face compounded headwinds from Southeast Asian export momentum. Vietnam’s National Statistics Office disclosed that November shipments climbed 39% annually to 88,000 MT, with January-November cumulative exports advancing 14.8% year-over-year to 1.398 million metric tons. Looking ahead, Vietnam’s 2025/26 output projections target 1.76 MMT (29.4 million bags)—up 6% year-on-year and marking a 4-year peak. The Vietnam Coffee and Cocoa Association forecasts potential 10% output expansion should favorable weather persist.

Inventory Dynamics Present Mixed Signals

Tightening warehouse stocks provide modest price support, though recent rebound efforts remain modest. ICE-monitored arabica inventories hit a 1.75-year low of 398,645 bags on November 20 before recovering to 426,938 bags by Wednesday—a 6-week high. Robusta stockpiles fell to an 11.5-month trough of 4,012 lots last week. However, these inventory improvements fail to offset structural supply expansion.

US Import Disruption Creates Window of Support

American arabica demand received a temporary cushion after Brazil’s November green coffee exports declined 27% annually to 3.3 million bags, per exporter group Cecafe. Prior tariff disruptions amplified this shortage: US purchases of Brazilian coffee from August through October—when Trump administration tariffs operated—collapsed 52% from year-ago levels to just 983,970 bags. Though tariffs have since moderated, US coffee inventories remain comparatively constrained, potentially sustaining selective demand.

Global Market Rebalancing Masks Structural Surplus

The International Coffee Organization reported October-through-September marketing year exports at 138.658 million bags, down marginally 0.3% year-over-year—suggesting demand resilience despite supply abundance. Yet forward projections paint an abundance narrative: The USDA’s Foreign Agriculture Service forecasts 2025/26 world production climbing 2.5% to a record 178.68 million bags. While arabica output contracts 1.7% to 97.022 million bags, robusta production accelerates 7.9% to 81.658 million bags—a rebalancing tilting towards pressure on arabica coffee quotes.

Brazil and Vietnam anchor the production expansion, with FAS estimates targeting 65 million bags and 31 million bags respectively for 2025/26—representing 0.5% and 6.9% annual gains. These increases translate to ending global stocks rising 4.9% to 22.819 million bags from 21.752 million bags in 2024/25, reinforcing the structural downside bias confronting coffee quotes across both arabica and robusta complexes.

The confluence of ample precipitation in Brazil, Vietnam’s accelerating export calendar, and record forward production estimates collectively frame a commodity struggling to defend recent highs amid a surplus environment.