Coffee prices have experienced a sharp decline, reaching four-month lows as the supply outlook improves. As of today, March arabica coffee futures (KCH26) fell by -0.05 (-0.01%), while January ICE robusta coffee (RMF26) dropped by -14 (-0.37%). A combination of factors, including favorable weather in Brazil and currency fluctuations, has contributed to this downturn in prices.
Recent weather reports indicate significant rainfall in Brazil’s coffee-growing regions, alleviating concerns over crop development. Climatempo announced that “intense and persistent rainfall” is anticipated this week. Additionally, Somar Meteorologia noted that Minas Gerais, Brazil’s largest arabica-producing area, received 79.8 mm of rain during the week ending December 12, amounting to 155% of the historical average. This influx of moisture is expected to bolster coffee crop yields, putting downward pressure on prices.
The Brazilian real has also weakened, hitting a 4.5-month low against the dollar. A weaker real typically encourages export sales from Brazilian coffee producers, further contributing to the bearish sentiment in the market. On December 4, Brazil’s crop forecasting agency, Conab, raised its estimate for the country’s 2025 coffee production by 2.4%, now projecting a total of 56.54 million bags, up from the previous estimate of 55.20 million bags.
Concerns about robusta coffee supplies have also weighed heavily on prices. Recent data from Vietnam’s National Statistics Office revealed that coffee exports from the country surged by 39% year-on-year in November, reaching 88,000 metric tons. Cumulatively, from January to November, coffee exports rose by 14.8% year-on-year to 1.398 million metric tons.
While arabica coffee futures have seen some support due to a decrease in exports from Brazil—down 27% year-on-year to 3.3 million bags—the overall outlook for coffee supplies continues to be bleak. The ICE-monitored arabica inventories recently fell to a 1.75-year low of 398,645 bags on November 20, although they have since rebounded to a six-week high of 426,938 bags. In contrast, robusta inventories dropped to an 11.5-month low of 4,012 lots last Wednesday.
A significant factor affecting American coffee purchases has been the previous tariffs imposed on Brazilian imports. Despite recent easing of these tariffs, U.S. buyers remain cautious. From August to October, during the tariff period, purchases of Brazilian coffee plummeted by 52%, amounting to 983,970 bags, compared to the same period last year.
Global coffee supply dynamics are complex. The International Coffee Organization (ICO) reported a 0.3% decline in global coffee exports for the current marketing year, with total exports reaching 138.658 million bags. Meanwhile, projections from the USDA’s Foreign Agriculture Service (FAS) indicate that world coffee production for 2025/26 is expected to increase by 2.5% year-on-year to a record 178.68 million bags. This forecast includes a 1.7% decrease in arabica production to 97.022 million bags, balanced by a 7.9% increase in robusta production to 81.658 million bags.
The FAS anticipates that Brazil’s coffee production will rise by 0.5% year-on-year to 65 million bags, while Vietnam’s output is projected to jump by 6.9% to a four-year high of 31 million bags. Ending stocks for the 2025/26 period are expected to rise by 4.9% to 22.819 million bags, up from 21.752 million bags in the previous year.
As the market adjusts to these changing conditions, coffee prices will likely remain under pressure. The interplay between supply forecasts, currency values, and export activity will continue to shape the dynamics of this essential global commodity.
