Coffee Market Faces Sustained Pressure as Brazil and Vietnam Supply Outlooks Shift

According to Barchart’s commodity analysis, global coffee markets experienced significant downward pressure in mid-January 2026, with both arabica and robusta futures closing sharply lower. March arabica coffee (KCH26) declined 3.85%, while March ICE robusta coffee (RMH26) fell 1.58%, marking a 5.5-month low for arabica and a 3.5-week low for robusta. The retreat reflects a complex interplay of supply expectations, inventory adjustments, and weather forecasts reshaping trader sentiment across the coffee sector.

Price Retreat Signals Market Concern

The dual decline in both coffee varieties signals heightened bearish sentiment despite their different supply fundamentals. Arabica’s steeper fall suggests particular concern about overabundant supplies entering the market. The concurrent weakness in robusta—traditionally a more stable contract—indicates that oversupply fears are affecting the entire coffee complex. This synchronized pressure underscores a fundamental shift in market expectations regarding global coffee availability.

Brazil’s Production Boom Creates Headwinds

Brazil, accounting for roughly one-third of global coffee output, has emerged as the primary bearish factor for prices. In December, Conab, the Brazilian government’s crop forecasting agency, significantly raised its 2025 production estimate by 2.4% to 56.54 million bags, up from the September projection of 55.20 million bags. This substantial upward revision signals an unusually bountiful harvest ahead, flooding markets with supply precisely when demand remains tepid.

However, recent export data introduces a counterpoint to the production narrative. Cecafe reported that Brazil’s December green coffee exports fell 18.4% to 2.86 million bags, with arabica shipments down 10% year-over-year to 2.6 million bags and robusta exports plummeting 61% to just 222,147 bags. The sharp export decline suggests exporters may be holding back shipments, possibly anticipating better pricing or awaiting harvest completion. Simultaneously, rainfall in Minas Gerais, Brazil’s premier coffee region, measured 33.9 millimeters during the week ending January 16—only 53% of the historical average—raising questions about whether the forecasted abundant production will materialize as expected.

Vietnam’s Export Surge Dominates Robusta Market

Vietnam’s position as the world’s largest robusta producer gives its supply decisions outsized market influence. The nation’s 2025 coffee exports surged 17.5% year-over-year to 1.58 million metric tons, according to Vietnam’s National Statistics Office, demonstrating robust foreign demand despite global oversupply concerns. Projections from the Vietnam Coffee and Cocoa Association (Vicofa) estimate that 2025/26 production will climb 6% year-over-year to 1.76 million metric tons—or 29.4 million bags—representing a four-year high. Should weather conditions remain favorable, output could rise an additional 10% above these projections.

This anticipated production surge weighs heavily on robusta prices, as traders price in the likelihood of extended tight margins for robusta coffee consumed in European and Asian markets. The combination of strong Vietnamese exports and projected production growth signals limited pricing power for robusta producers and exporters.

ICE Inventory Signals Mixed Market Dynamics

Inventory data provides nuanced signals about actual market tightness beneath the bearish price action. ICE-monitored arabica inventories initially fell to a 1.75-year low of 398,645 bags on November 20, suggesting genuine scarcity. However, by January 14, these same inventories recovered to 461,829 bags—a 2.5-month high—indicating replenishment and easing immediate supply concerns. Similarly, ICE robusta coffee inventories declined to a 1-year low of 4,012 lots on December 10, yet recovered to 4,609 lots by mid-January. The inventory recovery pattern suggests that while spot scarcity existed, the overall market is gradually restocking, contributing to downward price pressure.

Global Supply Picture Grows More Complicated

The International Coffee Organization reported in November that global coffee exports for the current marketing year (October-September) actually declined 0.3% year-over-year to 138.658 million bags, signaling constrained supplies at the export stage. Yet the USDA’s Foreign Agriculture Service (FAS) painted a more expansionary picture in its December report. FAS projected that world coffee production in 2025/26 will reach a record 178.848 million bags—a 2.0% increase year-over-year—driven primarily by surging robusta output rising 10.9% to 83.333 million bags, while arabica production actually contracts 4.7% to 95.515 million bags.

These conflicting signals—tight current exports alongside record future production—explain the market’s confused pricing. Additionally, FAS forecasts that 2025/26 ending stocks will fall 5.4% to 20.148 million bags from 21.307 million bags in 2024/25, suggesting modestly tighter conditions ahead despite the production surge. Brazil’s 2025/26 production is projected to decline 3.1% year-over-year to 63 million bags, while Vietnam’s output is expected to rise 6.2% to a four-year high of 30.8 million bags, reflecting the geographic shift in production toward Southeast Asia.

Market Outlook Remains Contested

Coffee prices today reflect the tension between near-term supply realities and longer-term production expectations. While Barchart’s commodity analysis tracking shows that weather-dependent regions like Brazil’s Minas Gerais face uncertain rainfall, offsetting factors include Vietnam’s growing export capability and rising global production forecasts. Traders navigating coffee markets must weigh whether current price levels adequately discount the anticipated production abundance or whether supply disruptions could still support higher valuations. The fundamental dynamic pits optimistic longer-term production forecasts against persistent near-term inventory concerns, creating a coffee market in transition.