Global Coffee Market Faces Pressure as Record Production Estimates Weigh on Futures

The coffee futures market experienced significant declines this week, with both arabica and robusta contracts reaching multi-month lows. March arabica fell to a 3-week low, while January robusta slipped to a 4-month floor as supply concerns shifted from shortage to surplus.

Brazil’s Abundant Rainfall Reshapes Price Dynamics

Heavy precipitation across Brazil’s primary coffee-growing regions has fundamentally altered market sentiment. The nation’s largest arabica production area, Minas Gerais, received 79.8 mm of rainfall during the week through December 12—representing 155% of the historical average. Meteorological forecasts indicate intense rainfall will persist throughout the week ahead.

This abundance of moisture, while beneficial for crop development, has triggered sharp selling pressure. Brazil’s crop forecasting agency raised its 2025 production projection by 2.4% to 56.54 million bags, up from a prior September estimate of 55.20 million bags. The larger harvest outlook has become the primary driver suppressing prices across both arabica and robusta contracts.

Vietnam’s Export Surge Compounds Market Oversupply Concerns

As the world’s largest robusta producer, Vietnam’s trade performance carries outsized market influence. The country’s November coffee exports surged 39% year-over-year to 88,000 MT, while January-through-November shipments climbed 14.8% from the prior year to 1.398 million MT.

Looking ahead, Vietnam’s 2025/26 coffee output is projected to reach 1.76 million MT—a 4-year peak representing 6% growth year-over-year. The Vietnam Coffee and Cocoa Association suggested output could climb an additional 10% above prior-year levels if favorable weather persists.

Global Supply Trajectory Points Toward Record Production

The USDA’s Foreign Agriculture Service forecasted that world coffee production during 2025/26 will reach 178.68 million bags, marking a record high and reflecting 2.5% year-over-year growth. The breakdown reveals a divergent trend: robusta output is expected to expand 7.9% to 81.658 million bags, while arabica production will contract 1.7% to 97.022 million bags.

For Brazil specifically, 2025/26 production is estimated at 65 million bags (0.5% higher than current year), while Vietnam’s harvest should climb 6.9% to 31 million bags. Global ending stocks are projected to rise 4.9% to 22.819 million bags from 21.752 million bags in the previous season.

Mixed Signals From Inventory and Trade Flows

ICE-monitored arabica inventories reached an 11.5-month low of 398,645 bags in November before recovering to 426,523 bags in early December. Robusta stocks similarly tightened to an 11.5-month low of 4,012 lots recently. These inventory constraints provide some floor to price declines.

Brazil’s green coffee exports tell a cautionary tale, however. November shipments fell 27% year-over-year to 3.3 million bags, reflecting earlier purchasing weakness when US tariffs discouraged Brazilian coffee purchases. American buyers reduced Brazilian coffee acquisitions by 52% during August-October compared to the prior year, bringing purchases to just 983,970 bags despite subsequent tariff relief.

The International Coffee Organization reported that global coffee exports for the current marketing year fell 0.3% year-over-year to 138.658 million bags, signaling modest export momentum amid production growth expectations.

The confluence of rising production forecasts, expanding regional harvests, and ample precipitation across key coffee-growing zones has created headwinds for both arabica and robusta contracts. While tighter near-term inventory levels provide tactical support, the structural shift toward surplus global supplies dominates the market narrative.