Arabica Coffee Backed by Worries Over Brazilian Weather

Coffee Market Update: Arabica Climbs, Robusta Slips

March arabica coffee futures have risen by 1.03% (+3.85), reaching a four-week peak, while March ICE robusta coffee has declined by 1.97% (-79).

Factors Influencing Coffee Prices

Arabica prices are benefiting from dry weather in Brazil, the world's top arabica producer. According to Somar Meteorologia, the Minas Gerais region received just 47.9 mm of rain in the week ending January 2—only 67% of the usual amount for this period. Additionally, a stronger Brazilian real, which hit a one-month high against the US dollar, is making Brazilian coffee exports less attractive, further supporting arabica prices.

Robusta Market Faces Pressure

Robusta coffee prices are under downward pressure as Vietnam, the leading robusta exporter, has significantly increased its shipments. The National Statistics Office of Vietnam reported a 17.5% year-over-year jump in coffee exports for 2025, reaching 1.58 million metric tons.

Inventory Trends and Market Impact

Declining ICE-monitored coffee inventories are lending support to prices. Arabica stocks tracked by ICE dropped to a 1.75-year low of 398,645 bags on November 20, before rebounding to a 2.5-month high of 457,0317 bags. Robusta inventories also hit a one-year low of 4,012 lots on December 10, but later climbed to a five-week high of 4,278 lots by late December.

US Tariffs Affect Coffee Trade

Previously high US tariffs on Brazilian coffee led American buyers to reduce purchases. Although these tariffs have been lowered, US coffee inventories remain limited. Between August and October, during the period when tariffs were in effect, US imports of Brazilian coffee fell by 52% compared to the previous year, totaling 983,970 bags.

Production Outlook and Price Pressure

Expectations of abundant coffee supplies are weighing on prices. On December 4, Brazil's crop forecasting agency Conab raised its 2025 coffee production estimate by 2.4% to 56.54 million bags, up from the September forecast of 55.20 million bags.

Vietnam is also set to boost its coffee output. The 2025/26 harvest is projected to rise by 6% year-over-year to 1.76 million metric tons (29.4 million bags), marking a four-year high. The Vietnam Coffee and Cocoa Association (Vicofa) anticipates a 10% increase in production for 2025/26 compared to the previous season, provided favorable weather continues. Vietnam remains the largest global supplier of robusta coffee.

Global Supply and Demand Insights

Signs of tightening global coffee supplies are supporting prices. The International Coffee Organization (ICO) reported that worldwide coffee exports for the current marketing year (October to September) slipped by 0.3% year-over-year to 138.658 million bags.

The USDA's Foreign Agriculture Service (FAS) released its bi-annual report on December 18, forecasting a 2% increase in global coffee production for 2025/26, reaching a record 178.848 million bags. This includes a 4.7% drop in arabica output to 95.515 million bags and a 10.9% rise in robusta production to 83.333 million bags. Brazil's 2025/26 coffee crop is expected to decrease by 3.1% to 63 million bags, while Vietnam's output is projected to climb by 6.2% to a four-year high of 30.8 million bags. Ending stocks for 2025/26 are anticipated to fall by 5.4% to 20.148 million bags, down from 21.307 million bags in 2024/25.