Brazilian Coffee Market Faces Mixed Pressures: Arabica Challenges vs. Robusta Momentum

March arabica coffee contracts declined on Thursday amid forecasts of steady rainfall in Brazil’s primary growing regions, while robusta coffee moved higher on expectations of limited precipitation in Vietnam. The divergent weather patterns created contrasting market dynamics for the two primary coffee varieties, highlighting how regional conditions continue to shape global pricing.

Rain Forecasts Weigh on Brazilian Arabica Prices

Brazilian arabica prices faced headwinds Thursday as meteorologists predicted substantial rains over the coming week in Minas Gerais, the nation’s largest coffee-growing area. The adverse weather forecast pressured March arabica contracts, which closed down 5.50 points, or 1.57%. This weather-driven decline reflects trader concerns about potential crop impacts and flowering conditions in Brazilian arabica regions.

Recent precipitation data from Somar Meteorologia presented a mixed picture for Brazilian coffee growers. During the week ending January 16, Minas Gerais received 33.9 mm of rain, representing only 53% of the historical average. While this below-average rainfall initially supported prices by raising supply concerns, forecasts for steady rains in the coming week shifted market sentiment, creating the downward pressure observed Thursday.

Brazilian Production Surge Offsets Export Weakness

Brazil’s coffee production trajectory presents a complex story for market participants. Conab, the country’s official crop forecasting agency, elevated its 2025 production estimate by 2.4%, projecting total Brazilian coffee output at 56.54 million bags, up from the September forecast of 55.20 million bags. Despite this production strength, Brazilian coffee exports showed unexpected weakness recently.

Cecafe reported that Brazil’s total December green coffee exports fell 18.4% compared to the prior year, declining to 2.86 million bags. Within this broader decline, arabica exports contracted 10% year-over-year to 2.6 million bags, while robusta shipments experienced a sharper 61% year-over-year decrease to 222,147 bags. This export weakness, despite robust production estimates, suggests potential inventory accumulation or shifting trade patterns for Brazilian coffee.

Global Coffee Supply Dynamics Signal Ample Availability

The recovery in ICE-monitored coffee inventories reflects the broader theme of ample global supplies constraining prices. Arabica inventory stocks, which had fallen to a 1.75-year low of 398,645 bags on November 20, rebounded to a 2.5-month high of 461,829 bags by January 14. Similarly, robusta inventories, which dipped to a 1-year low of 4,012 lots on December 10, recovered to a 1.75-month high of 4,609 lots recently.

International Coffee Organization data reinforces this picture of sufficient global supplies. The ICO reported that global coffee exports for the current marketing year declined marginally by 0.3% year-over-year to 138.658 million bags, indicating relatively stable outflows despite production variations. The USDA’s Foreign Agriculture Service projects that world coffee production in 2025/26 will increase 2.0% year-over-year to a record 178.848 million bags, creating sustained pressure on prices amid abundant supply.

Vietnam Robusta Surge Creates Competitive Pressure

In contrast to Brazilian challenges, Vietnam’s robusta coffee production and exports surged, providing an alternative supply source. Vietnam’s National Statistics Office reported that 2025 coffee exports jumped 17.5% year-over-year to 1.58 million metric tons. Looking ahead, Vietnam’s coffee output is projected to climb 6% year-over-year to 1.76 million metric tons in 2025/26, or approximately 29.4 million bags—a 4-year high.

This Vietnamese supply growth reflects favorable weather conditions and crop management. The Vietnam Coffee and Cocoa Association indicated that if weather remains favorable, 2025/26 coffee production could be 10% higher than the previous harvest year. Vietnam’s emergence as the world’s dominant robusta producer means that abundant supplies from this major source will likely continue restraining robusta prices, even as Brazilian arabica faces weather-related tightness.

Looking Forward: Structural Changes in Global Coffee Markets

The USDA Foreign Agriculture Service bi-annual assessment painted a nuanced picture for coffee markets ahead. While world production will reach record levels in 2025/26, the composition matters significantly. Arabica production is projected to decline 4.7% year-over-year to 95.515 million bags, while robusta production surges 10.9% year-over-year to 83.333 million bags. This robusta expansion, heavily driven by Vietnamese increases, will likely maintain price pressure on that variety.

For Brazilian coffee specifically, FAS forecasts a 3.1% decline in 2025/26 production to 63 million bags compared to the previous year, suggesting that the near-term production strength may not persist. Meanwhile, Vietnam’s 2025/26 output is expected to increase 6.2% year-over-year to a 4-year high of 30.8 million bags. The combination of declining Brazilian arabica output and surging Vietnamese robusta supplies creates divergent market pressures.

On the inventory front, FAS projects that 2025/26 ending stocks will decline 5.4% to 20.148 million bags from 21.307 million bags in 2024/25, suggesting that while supplies remain ample, the trajectory is toward tighter conditions. This incremental tightening could eventually support prices, particularly for Brazilian coffee if production declines materialize as forecasted.