Rain Predictions Across Brazil Drive Down Coffee Prices

Coffee Market Update: Prices Drop Amid Weather Shifts and Currency Strength

March arabica coffee futures (KCH26) experienced a sharp decline today, falling by 3.41%, while March ICE robusta coffee (RMH26) slipped by 1.02%.

The downturn in coffee prices is largely attributed to forecasts predicting rainfall across central Brazil in the coming week, which has eased previous worries about dry conditions. Additionally, a surge in the U.S. dollar to its highest level in four weeks has put downward pressure on commodities, including coffee.

Related News from Barchart

Market Drivers and Global Supply Trends

This week, robusta coffee has faced downward pressure as Vietnam, the leading producer of robusta, reported a surge in exports. According to Vietnam's National Statistics Office, coffee exports for 2025 have risen by 17.5% year-over-year, reaching 1.58 million metric tons.

Last Thursday, arabica prices climbed to a four-week high, fueled by lower-than-normal rainfall in Brazil, the top arabica producer. Data from Somar Meteorologia indicated that Minas Gerais, Brazil’s main arabica-growing region, received just 47.9 mm of rain in the week ending January 2—only 67% of the historical average.

Lower inventories tracked by ICE are providing some support for coffee prices. Arabica stocks monitored 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 461,829 bags by Wednesday. Similarly, robusta inventories fell to a one-year low in December but have since recovered to a five-week high.

U.S. buyers have reduced their purchases of Brazilian coffee, partly due to previously high tariffs on imports from Brazil. Although these tariffs have been reduced, U.S. coffee inventories remain limited. Between August and October, during the period when tariffs were in effect, U.S. imports of Brazilian coffee fell by 52% compared to the previous year, totaling 983,970 bags.

Expectations of abundant coffee supplies are putting additional pressure on prices. On December 4, Brazil’s crop forecasting agency, Conab, increased its estimate for Brazil’s 2025 coffee harvest by 2.4% to 56.54 million bags, up from the previous forecast of 55.20 million bags in September.

Rising coffee production in Vietnam is also weighing on the market. Projections for Vietnam’s 2025/26 coffee output suggest a 6% year-over-year increase to 1.76 million metric tons (29.4 million bags), marking a four-year high. The Vietnam Coffee and Cocoa Association (Vicofa) anticipates that, provided favorable weather continues, the 2025/26 crop could be 10% larger than the previous year. Vietnam remains the world’s largest robusta coffee producer.

Global Coffee Supply and Production Outlook

Signs of tightening global coffee supplies are offering some support to prices. The International Coffee Organization (ICO) reported on November 7 that worldwide coffee exports for the current marketing year (October to September) declined by 0.3% year-over-year to 138.658 million bags.

According to the USDA’s Foreign Agriculture Service (FAS) bi-annual report released on December 18, global coffee production for 2025/26 is expected to reach a record 178.848 million bags, a 2% increase from the previous year. 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. The FAS also forecasts that Brazil’s 2025/26 coffee harvest will 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 predicted to fall by 5.4% to 20.148 million bags, down from 21.307 million bags in 2024/25.