Global Coffee Supplies Surge Ahead: What's Pushing Prices Down

Coffee futures took a hit on Friday as market participants digested expectations for record global production. March arabica coffee contracts fell 1.83% while January robusta coffee slipped 2.00%, with robusta marking a 2.5-month low. The selling pressure stems from a fundamental shift in supply dynamics across major producing regions.

Production Forecasts Paint a Bullish Picture for Supplies

Brazil’s crop forecasting agency Conab just raised eyebrows by bumping up the country’s 2025 production estimate to 56.54 million bags—a 2.4% jump from September’s projection of 55.20 million bags. But that’s only part of the story. The USDA’s Foreign Agriculture Service painted an even more expansive global picture, projecting world coffee production in 2025/26 will hit a record 178.68 million bags, up 2.5% year-over-year. Within that aggregate, robusta output is expected to surge 7.9% to 81.658 million bags, while arabica faces a slight headwind with a projected 1.7% decline to 97.022 million bags.

Vietnam, the world’s dominant robusta producer, is ramping up significantly. The country’s November coffee exports jumped 39% year-over-year to 88,000 metric tons, while cumulative January-November shipments climbed 14.8% to 1.398 million metric tons. Looking ahead, Vietnam’s 2025/26 green coffee output is projected to rise 6.9% to 31 million bags—a four-year high. The Vietnam Coffee and Cocoa Association even suggested production could run 10% above the previous year if weather cooperates.

Mixed Signals: Where Support Emerges

The supply tsunami isn’t entirely uncontested. Arabica found some footing from Brazil’s November export data: green coffee shipments dropped 27% year-over-year to 3.3 million bags, signaling tighter near-term availability despite the larger crop forecast. Meteorological data also provided comfort—Minas Gerais, Brazil’s largest arabica-producing region, received only 11 mm of rain during the week ended December 5, just 17% of the historical average, which could stress plants heading into the growing season.

Storage levels tell a nuanced tale. ICE arabica coffee inventories bottomed at a 1.75-year low of 398,645 bags on November 20, though they recovered to 426,523 bags last Friday. ICE robusta stocks hit an 11.5-month low of 4,012 lots on Wednesday, suggesting supply tightness at the exchange level even as production capacity expands globally.

Demand Side Showing Softness

US coffee buyers have been cautious. American purchases of Brazilian coffee from August through October—when tariffs were elevated—plunged 52% year-over-year to 983,970 bags. While those tariffs have since eased, US coffee inventories remain constrained, limiting immediate buying appetite. International demand also appears measured: the International Coffee Organization reported that global coffee exports for the current marketing year (Oct-Sep) fell 0.3% year-over-year to 138.658 million bags.

Policy Headwinds Add Complexity

A regulatory curveball adds bearish overtones. The European Parliament approved a one-year delay to the EU Deforestation Regulation (EUDR) on November 26, allowing continued imports of coffee and other commodities from regions experiencing deforestation in Africa, Indonesia, and South America. This reprieve effectively opens supply channels that might otherwise have faced restrictions, potentially flooding EU markets with additional volumes.

The Bottom Line

Coffee prices face structural pressure from an anticipated supply abundance across both arabica and robusta variants. While spot tightness and weather challenges offer tactical support, the trajectory of global production and the delay in deforestation enforcement rules stack the odds toward softer prices in the near to medium term. Traders monitoring green coffee price trends should watch Brazilian precipitation patterns and Vietnam’s export flow closely—these will likely determine whether support levels hold or give way to further downside.