Brazil's Weather Pattern Reshapes Coffee Market Dynamics as Supplies Surge

Persistent rainfall across Brazil’s coffee-growing regions is triggering a significant downturn in global coffee markets. March arabica futures dropped 2.34%, sliding to three-week lows, while January robusta contracts slipped 2.13% to four-month lows. Meteorological forecasters project “intense and persistent rainfall” to continue throughout the week in Brazil’s key production zones, fundamentally altering supply expectations and market sentiment.

Rain’s Impact on Brazilian Production Outlook

Brazil’s primary arabica region, Minas Gerais, received 79.8 mm of rainfall during the week ending December 12—substantially above the historical average at 155% of normal precipitation. This abundance of moisture has eased prior concerns regarding crop stress and development delays.

The Brazilian crop forecasting agency Conab responded to favorable growing conditions by raising its 2025 production estimate by 2.4% to 56.54 million bags, up from September’s 55.20 million bag projection. Such expansions in expected yields are creating downward pressure on valuations as market participants digest larger harvests ahead.

Robusta Market Pressured by Asian Production Surge

Robusta coffee faces distinct headwinds from surging Vietnamese output. Vietnam’s coffee exports climbed 39% year-over-year in November alone, reaching 88,000 MT, while January-through-November shipments expanded 14.8% y/y to 1.398 million MT.

Looking forward, Vietnam’s 2025/26 coffee production is projected to reach 1.76 million MT—29.4 million bags—marking a four-year peak. Industry associations forecast output could climb an additional 10% if meteorological conditions prove favorable. As the world’s largest robusta producer, Vietnam’s production trajectory substantially influences global pricing dynamics.

Mixed Signals from Inventory and Export Flows

ICE-monitored arabica inventories recently recovered to 426,523 bags on December 5, though they remain historically compressed compared to prior years. Conversely, robusta stockpiles fell to an 11.5-month low of 4,012 lots, creating underlying support for that contract.

Brazilian green coffee exports contracted sharply, dropping 27% year-over-year in November to 3.3 million bags according to exporter group Cecafe. The decline reflects residual effects of elevated US tariff policies implemented during the prior administration, which suppressed American buyer activity. US purchases of Brazilian coffee from August through October fell 52% to 983,970 bags compared to the same period last year, demonstrating tariff impact on trade flows.

Global Production Trajectory Points to Abundance

The US Department of Agriculture’s Foreign Agriculture Service projects world coffee production in 2025/26 will expand 2.5% to a record 178.68 million bags. Within this aggregate, arabica production is expected to decline 1.7% to 97.022 million bags while robusta climbs 7.9% to 81.658 million bags.

International Coffee Organization data indicates global exports for the current marketing year fell marginally at 0.3% year-over-year to 138.658 million bags, suggesting tight near-term conditions despite longer-term abundance indicators. Global ending stocks are forecast to rise 4.9% to 22.819 million bags in 2025/26, further reinforcing the outlook for ample supply availability and sustained price pressure across both arabica and robusta contracts.