Arabica Coffee Prices Weaken as Brazil's Outlook Brightens

March arabica coffee futures declined 1.57% on Thursday, while robusta contracts gained 0.82%. The divergent performance reflected sharply different weather patterns across the globe’s two largest coffee-producing regions. Arabica prices faced selling pressure following forecasts of substantial rainfall across Minas Gerais, Brazil’s dominant arabica-growing territory, over the coming week. Conversely, robusta coffee rallied on predictions of minimal precipitation in Vietnam’s Central Highlands during the same period.

Inventory Recovery Undermines Arabica Market Support

Recent trends in monitored coffee reserves present a bearish backdrop for arabica values. The ICE arabica stockpile hit a 1.75-year low of 398,645 bags in late November, but has since rebounded to 461,829 bags—a 2.5-month high recorded in mid-January. This inventory recovery signals growing supply availability that weighs against price strength. Similarly, robusta reserves fell to a 1-year low of 4,012 lots in December before climbing to 4,609 lots last week, suggesting improved warehouse positions across both varieties. Such inventory improvements typically constrain price appreciation despite other supportive factors.

Brazilian Production Surge May Extend Arabica Pressure

Brazil’s crop agency Conab substantially raised its 2025 coffee production estimate earlier this month, forecasting 56.54 million bags—a 2.4% increase from September’s projection of 55.20 million bags. This expanding output, particularly in arabica varieties, creates additional headwinds for prices. The production optimism stands in sharp contrast to recent export weakness. Brazil’s December green coffee shipments contracted 18.4% to 2.86 million bags, with arabica exports slipping 10% year-over-year to 2.6 million bags and robusta shipments plummeting 61% to just 222,147 bags. However, arabica growers drew some solace from below-average rainfall in Minas Gerais, which received only 53% of historical precipitation levels during the week ending mid-January.

Vietnam’s Robusta Surge Contrasts with Arabica Dynamics

Vietnam’s coffee sector paints a starkly different picture, with robust export momentum supporting robusta prices. The nation’s 2025 coffee shipments surged 17.5% year-over-year to 1.58 million metric tons, while production for 2025/26 is projected to climb 6% to 1.76 million metric tons (29.4 million bags)—marking a 4-year production high. The Vietnam Coffee and Cocoa Association previously indicated that Vietnamese output could reach 10% above the prior season if weather cooperates. This expansion in the world’s largest robusta supplier stands in marked contrast to arabica’s more constrained outlook, with global arabica production forecast to decline 4.7% in 2025/26.

Global Supply Picture Tightens Despite Mixed Signals

The International Coffee Organization reported in November that global coffee exports for the current marketing year fell marginally 0.3% year-over-year to 138.658 million bags, suggesting stabilization after years of oversupply. However, the USDA’s Foreign Agriculture Service projects world coffee production will increase 2.0% in 2025/26 to a record 178.848 million bags. Critically, this growth masks divergent regional trends: arabica production is expected to decline to 95.515 million bags while robusta surges to 83.333 million bags. Brazil’s 2025/26 output is forecast to slip 3.1% to 63 million bags, while Vietnam’s supply is anticipated to climb 6.2% to 30.8 million bags—a 4-year peak. Global ending stocks for 2025/26 are projected to fall 5.4% to 20.148 million bags from 21.307 million bags in the prior year, though this drawdown may prove insufficient to fully support arabica prices given rising regional supplies from Vietnam and expanding Brazilian robusta output.