Coffee Market Overview: Key Takeaways
- Arabica and Robusta coffee futures experienced declines, reaching one-week lows.
- EU’s delayed deforestation law is contributing to expectations of ample coffee supplies.
- Dry weather conditions in Brazil’s key arabica-growing regions are providing some price support.
- Shrinking coffee inventories on ICE exchanges offer a bullish signal for prices.
- Increased coffee production forecasts from Vietnam and Brazil present bearish pressures.
- Global coffee export data shows a slight year-over-year decrease, acting as a bullish factor.
Coffee Prices Dip Amidst Supply Outlook Concerns
March arabica coffee futures (KCH26) closed down 1.50 points, a 0.39% decrease, while January ICE robusta coffee futures (RMF26) settled 93 points lower, down 2.04%. Both coffee contracts touched one-week lows on Monday, reflecting downward price pressure driven by expectations of robust global coffee supplies.
The recent approval by the European Parliament to delay the deforestation law by one year has significantly influenced market sentiment. This regulation, known as EUDR, is designed to curb deforestation linked to key commodities imported into the EU, including coffee. The postponement allows continued imports from regions in Africa, Indonesia, and South America, areas where deforestation is a concern, thus maintaining ample coffee availability.
💡 Understanding market sentiment is crucial. The EUDR delay eased immediate supply fears, pushing prices down, demonstrating how regulatory news can impact commodity markets.
Brazilian Weather and Inventory Levels Influence Coffee Market
Despite the bearish outlook from anticipated abundant supplies, losses in coffee prices were somewhat contained due to concerns about arid conditions in Brazil. Recent reports indicate that Minas Gerais, Brazil’s primary arabica coffee-producing region, received only 20.4 mm of rain in the week ending November 28th. This figure represents a mere 39% of the historical average for that period.
Adding another layer of support for coffee prices are the shrinking inventories held on ICE exchanges. The imposition of US tariffs on coffee imports from Brazil has led to a notable reduction in these reserves. Specifically, ICE-monitored arabica inventories fell to a 1.75-year low of 398,645 bags by November 20th. Similarly, ICE robusta coffee inventories decreased to a 6.75-month low of 4,342 lots on Monday.
American buyers have been hesitant to secure new contracts for Brazilian coffee due to these tariffs, tightening US supplies. Brazil typically accounts for about a third of America’s unroasted coffee imports. Evidence of this impact is seen in the 52% drop in US purchases of Brazilian coffee from August through October compared to the previous year, totaling 983,970 bags during the period when President Trump’s tariffs were active.
Production Forecasts and Global Coffee Supply Dynamics
Brazil and Vietnam Production Forecasts Impact Coffee Prices
Forecasting agencies point towards increased coffee production in key exporting nations, which acts as a bearish factor for futures. StoneX, in a November 19th report, anticipated that Brazil would produce 70.7 million bags of coffee in the 2026/27 marketing year. This forecast includes an expected 47.2 million bags of arabica, marking a significant 29% year-over-year increase.
Vietnam, the world’s leading producer of robusta coffee, also projects increased export volumes. According to the Vietnam National Statistics Office, coffee exports from January to October 2025 rose by 13.4% year-over-year, reaching 1.31 million metric tons. Further strengthening this trend, Vietnam’s 2025/26 coffee production is projected to climb 6% year-over-year to 1.76 million metric tons (approximately 29.4 million bags), a four-year high.
📍 The Vietnam Coffee and Cocoa Association (Vicofa) indicated on October 24th that the country’s coffee output for the 2025/26 season could see a 10% increase over the prior year, contingent on favorable weather conditions. This surge in Vietnamese supply adds considerable bearish pressure to global coffee prices, particularly for the robusta variety.
Signs of Tighter Global Coffee Supply and Their Impact
Conversely, indications of a tighter global coffee supply are providing support for prices. The International Coffee Organization (ICO) reported on November 7th that global coffee exports for the current marketing year (October-September) saw a marginal decrease of 0.3% year-over-year, totaling 138.658 million bags. This slight contraction suggests a more balanced supply-demand dynamic than initially perceived.
Further bullish sentiment emerged when Conab, Brazil’s official crop forecasting agency, revised its 2025 arabica coffee crop estimate downward. On September 4th, the agency reduced the estimate by 4.9% to 35.2 million bags, a decrease from the May forecast of 37.0 million bags. Conab also lowered its total Brazil 2025 coffee production estimate by 0.9% to 55.2 million bags, down from a May estimate of 55.7 million bags.
📊 Analyzing these contrasting forecasts is key. Bullish factors like reduced Brazilian estimates and lower global exports compete with bearish pressures from large production forecasts, creating market volatility. Understanding which factors will ultimately dominate is crucial for coffee traders.
USDA and Conab Projections for Global Coffee Production
The USDA’s Foreign Agriculture Service (FAS) projected in June that global coffee production for the 2025/26 season would reach a record 178.68 million bags, an increase of 2.5% year-over-year. Within this projection, arabica production was expected to decrease by 1.7% to 97.022 million bags, while robusta production was forecast to surge by 7.9% to 81.658 million bags.
The FAS also forecasted specific production figures for major exporting countries. Brazil’s 2025/26 coffee production was estimated to rise by 0.5% year-over-year to 65 million bags. Meanwhile, Vietnam’s output was projected to increase by 6.9% year-over-year to a four-year high of 31 million bags. These projections suggest a notable shift towards increased robusta output globally.
Accompanying these production forecasts, the FAS anticipated that 2025/26 ending stocks would climb by 4.9% to 22.819 million bags, up from 21.752 million bags in the 2024/25 period. This outlook for higher inventories generally exerts downward pressure on commodity prices.
Frequently Asked Questions about Coffee Market Trends
What is the current state of arabica and robusta coffee futures?
As of Monday, March arabica coffee futures (KCH26) closed down 1.50 points (-0.39%), and January ICE robusta coffee futures (RMF26) settled 93 points lower (-2.04%), both reaching one-week lows.
How is the EU’s deforestation law affecting coffee supplies?
The European Parliament’s one-year delay to the deforestation law means continued imports of coffee into the EU from regions where deforestation is a concern, contributing to expectations of ample global coffee supplies which pressured prices.
What impact are weather conditions in Brazil having on coffee prices?
Dryness in Brazil’s key arabica-growing regions, particularly Minas Gerais, is a factor limiting price declines. The region received significantly less rain than its historical average, raising concerns about potential impacts on the arabica crop.
Are coffee inventories increasing or decreasing?
ICE coffee inventories are currently shrinking. Arabica inventories fell to a 1.75-year low, and robusta inventories reached a 6.75-month low, a development that provides support for coffee prices.
Which countries are expected to increase coffee production significantly?
Both Brazil and Vietnam are projected to see increased coffee production in the upcoming marketing year. Vietnam, in particular, is expected to have a four-year high in production, boosting its robusta output.
Coffee Market Outlook: Navigating Supply and Demand
The coffee market remains under pressure from expectations of abundant global supplies, largely influenced by the delayed EU deforestation law and strong production forecasts from major exporters like Brazil and Vietnam. These factors suggest that the bearish sentiment is likely to persist in the short term.
However, underlying bullish elements, such as dry weather in Brazil’s arabica-growing regions and dwindling ICE coffee inventories, are providing some floor to prices. The interplay between these competing factors – anticipated supply increases versus potential supply disruptions and reduced inventories – will shape coffee’s price trajectory.
Traders will continue to monitor weather patterns in producing countries, export data, and inventory levels closely. Any significant shifts in these indicators could lead to notable price movements as the market digests the complex dynamics of global coffee supply and demand.
