Brazilian Weather Patterns Reshape Global Coffee Market Dynamics Amid High Production Forecasts

Weather-Driven Price Pressure Intensifies

Coffee futures markets experienced notable downward movement this week, with March arabica coffee declining 2.34% and January ICE robusta coffee sliding 2.13%. The broader trend reflects a continuation of last Friday’s weakness, pushing arabica prices to their lowest point in three weeks while robusta reached its weakest position in four months. This decline stems primarily from meteorological developments in the world’s largest coffee-producing region, where persistent precipitation is reshaping supply expectations.

Brazil’s High Production Output Weighs on Valuations

Brazil’s coffee sector has entered a phase of abundant rainfall that is significantly altering market sentiment. Climatempo’s weather forecast predicting intense and continuous precipitation across coffee-growing zones this week reinforced bearish sentiment. Data from Somar Meteorologia showed that Minas Gerais—the nation’s primary arabica growing area—absorbed 79.8 mm of precipitation during the week through December 12, representing 155% of its historical norm. This moisture profile signals robust crop development prospects.

Production forecasts have reinforced downward price pressure. Brazil’s official crop forecasting body Conab elevated its 2025 coffee production projection by 2.4% in early December, settling at 56.54 million bags compared to the September estimate of 55.20 million bags. The high Brazil production outlook, combined with these weather-supportive conditions, has created a perception of ample global supplies entering the market.

Robusta Supplies Accelerate from Southeast Asia

Robusta coffee faces concurrent pressure from expanded supply flows originating from Vietnam, the world’s dominant robusta producer. Vietnam’s National Statistics Office revealed that November coffee exports surged 39% year-over-year to reach 88,000 MT, while the cumulative January-through-November export volume climbed 14.8% year-over-year to 1.398 million MT. Long-term production trajectories suggest this expansion will persist, with Vietnam’s 2025/26 coffee output projected to reach 1.76 million MT (29.4 million bags), representing a 6% year-over-year increase and marking a four-year production summit.

Limited Support from Inventory Reductions and Export Constraints

Modest price support has emerged from inventory dynamics and export flows. ICE-monitored arabica inventories fell to a 1.75-year low of 398,645 bags on November 20, though they subsequently recovered to 426,523 bags by December 5. Similarly, ICE robusta coffee inventories touched an 11.5-month low of 4,012 lots. Export data from the Cecafe exporter association showed Brazil’s November green coffee shipments declined 27% year-over-year to 3.3 million bags, which offered temporary price firmness for arabica.

Trade policy shifts have also influenced demand patterns. US tariff policies previously imposed on Brazilian coffee imports resulted in sharply reduced American purchasing during August-October, with US coffee imports from Brazil falling 52% year-over-year to 983,970 bags during the tariff period. Although these tariffs have subsequently been reduced, US coffee inventory levels remain constrained.

Global Supply Outlook Remains Elevated

The International Coffee Organization’s November report indicated that global coffee exports for the current marketing year (October-September) declined marginally by 0.3% year-over-year to 138.658 million bags. However, the USDA’s Foreign Agriculture Service projects that 2025/26 world coffee production will expand 2.5% year-over-year to a record 178.68 million bags, driven by a 7.9% increase in robusta output to 81.658 million bags, despite an expected 1.7% decline in arabica production to 97.022 million bags. Ending stocks for the 2025/26 marketing year are forecast to increase 4.9% to 22.819 million bags, further reinforcing the bearish backdrop for prices.