Global Coffee Supply Glut Triggers Sustained Price Decline Amid Production Surge

Coffee futures experienced a sharp downturn this week as both arabica and robusta varieties succumbed to mounting supply pressures. March arabica coffee futures fell 8.20 points (-2.28%), while January robusta contracts slid 107 points (-2.65%), with arabica hitting a 3-week low and robusta plummeting to a 4-month low. The two-week downtrend reflects a fundamental shift in market sentiment driven by expectations of ample supply flowing into the global market.

Supply Expansion Across Major Producing Regions

Brazil’s coffee production outlook has undergone significant upward revision, establishing an ample history of bumper harvests. Conab, Brazil’s official crop forecasting agency, increased its 2025 coffee production estimate by 2.4% to 56.54 million bags, up from the September projection of 55.20 million bags. This upward adjustment follows favorable weather conditions, with Minas Gerais—Brazil’s primary arabica-producing region—receiving 79.8 mm of rainfall during the week ending December 12, representing 155% of historical precipitation averages. Such abundant rains have eased previous drought concerns and signaled robust crop development.

Vietnam, the world’s largest robusta producer, is simultaneously ramping up output. The country’s November coffee exports surged 39% year-over-year to 88,000 metric tons, while year-to-date exports (January through November) climbed 14.8% to 1.398 million metric tons. The Vietnam Coffee and Cocoa Association projected that 2025/26 production could reach 10% above the prior year if weather conditions remain stable, with 2025/26 output projected at 31 million bags—a four-year high.

Global Production Forecasts Point to Record Supplies

The international coffee market faces historically elevated supply levels. The U.S. Department of Agriculture’s Foreign Agriculture Service projects world coffee production in 2025/26 at a record 178.68 million bags, a 2.5% increase year-over-year. Arabica production is expected to decline 1.7% to 97.022 million bags, while robusta output will expand 7.9% to 81.658 million bags. This asymmetric growth underscores how robusta abundance is driving particular pressure on prices.

The International Coffee Organization reported that global coffee exports for the current marketing year fell just 0.3% year-over-year to 138.658 million bags, suggesting supply remains resilient despite modest export headwinds.

Inventory Dynamics and Mixed Signals

ICE-monitored arabica inventories hit a 1.75-year low of 398,645 bags on November 20, though they recovered to 426,523 bags by December 5. Meanwhile, robusta inventories declined to an 11.5-month low of 4,012 lots, indicating some tightness in near-term availability. However, global ending stocks are projected to climb 4.9% to 22.819 million bags in 2025/26, compared to 21.752 million bags in 2024/25, reflecting the ample history of supply accumulation ahead.

US coffee inventory conditions remain constrained due to reduced Brazilian purchases. American buyers cut Brazilian coffee acquisitions by 52% from August through October (when elevated tariffs were in effect) to just 983,970 bags compared to the year-earlier period. Although tariff rates have since been moderated, US stockpiles have not yet normalized.

Brazil’s green coffee export data provided some counterweight, with November shipments declining 27% year-over-year to 3.3 million bags, suggesting near-term export constraints from the leading producer.

The confluence of surging production forecasts, expanded supplies across major origins, and rising global ending stocks has created downward price momentum that appears likely to persist as harvests advance through the season.