Brazil Coffee Market Faces Mixed Signals as Revised Weather Forecasts Weigh on Prices

Recent weather forecasts predicting increased rainfall across Brazil’s key coffee-growing regions have pressured global arabica and robusta prices lower, reversing early gains in March contracts. March arabica coffee fell -1.30 (-0.36%), while March ICE robusta declined -7 (-0.17%), as traders reassess supply dynamics following the updated meteorological outlook for the coming week.

Weather Outlook Undermines Recent Gains for Brazil Coffee

Brazil’s position as the world’s largest arabica producer makes domestic weather conditions critical for global pricing. Last week’s rally to one-month highs was driven by concerns over below-average rainfall earlier in January, with Minas Gerais—Brazil’s primary arabica-growing area—recording only 26.5mm of precipitation against a historical average of 91mm for the same period. This moisture deficit had supported bullish sentiment. However, the latest meteorological forecasts now point toward more ample rainfall in the coming days, easing drought concerns and triggering the subsequent price reversal. Such weather volatility highlights how closely Brazil coffee supply prospects drive international market sentiment.

Production Surge and Vietnam Competition Reshape Global Supply Outlook

Looking ahead to the 2025/26 crop year, global Brazil coffee supply is expected to remain abundant. Brazil’s crop forecasting agency Conab raised its 2025 production estimate by 2.4% to 56.54 million bags in recent updates, signaling robust domestic output. However, USDA projections paint a more complex picture, forecasting a -3.1% decline for Brazil’s 2025/26 coffee production to 63 million bags, moderating from prior year levels.

Vietnam, the world’s leading robusta producer, is exerting increasing downward pressure on the market. Vietnam’s 2025 coffee exports surged +17.5% year-on-year to 1.58 million metric tons, and production is projected to climb +6% year-on-year to 1.76 million metric tons. The Vietnam Coffee and Cocoa Association has indicated that 2025/26 output could reach 10% above the prior crop if weather remains favorable, potentially reaching 30.8 million bags—a four-year high. This surge in Vietnamese robusta supplies weighs on robusta prices despite global demand.

Inventory Levels Reflect Tightening but Volatile Dynamics

While ICE-monitored arabica inventories reached a 1.75-year low of 398,645 bags in November, they subsequently recovered to 461,829 bags in recent weeks, suggesting some stabilization. Robusta inventories similarly bottomed at 4,012 lots in early December before recovering to 4,278 lots, indicating modest inventory support remains available despite the broader tightening trend.

The broader global picture shows mixed messages. The International Coffee Organization reported that global coffee exports for the current marketing year fell -0.3% year-on-year to 138.658 million bags, pointing toward constrained supplies. However, the USDA projects global 2025/26 coffee production will increase +2.0% year-on-year to a record 178.848 million bags, with robusta production climbing +10.9% to 83.333 million bags while arabica declines -4.7% to 95.515 million bags.

Looking Ahead: What This Means for Brazil Coffee Markets

The interplay between Brazil’s weather patterns, production levels, and Vietnam’s expanding output will likely determine Brazil coffee price direction in coming months. While near-term rain forecasts have tempered enthusiasm, longer-term supply increases from both major producing nations suggest limited upside for prices. The USDA forecast that 2025/26 ending stocks will fall only slightly by -5.4% to 20.148 million bags—remaining historically elevated—reinforces bearish sentiment for Brazil coffee prospects. Traders monitoring weather and official crop estimates will be essential for navigating what appears to be an increasingly well-supplied Brazil coffee market.