Arabica Coffee Prices Climb Sharply as Brazilian Weather Deteriorates and Supply Dynamics Shift

Price Momentum and Market Drivers

The arabica coffee market is experiencing notable strength, with March futures contracts advancing 3.7% and gaining 13.30 points, while robusta contracts have risen more modestly at 1.61%, up 63 points. This rally has pushed arabica prices to their highest point in a month, marking renewed investor interest in the commodity. The catalyst for this movement stems from several converging factors reshaping the supply-demand balance.

Weather Pressures in the World’s Leading Arabica Producer

Brazil’s dominance in global arabica production makes its weather patterns particularly significant for price direction. The Minas Gerais region, which serves as Brazil’s primary arabica cultivation zone, has experienced notably drier conditions. In the week concluding January 2, the area recorded just 47.9 mm of rainfall—representing only 67% of the historical average—according to Somar Meteorologia. This rainfall deficit raises concerns about crop stress during a critical growth period.

Currency movements have compounded the supply-side dynamics. The Brazilian real has appreciated to a one-month peak against the US dollar, making exports less attractive from a financial perspective. As exporters face headwinds in selling at competitive prices, the reduced supply flowing into international markets has provided additional price support for arabica.

Robusta Market Tempered by Vietnamese Surge

While arabica has benefited from Brazilian constraints, robusta coffee faces offsetting pressures from expanding supplies elsewhere. Vietnam, positioned as the world’s premier robusta supplier, reported a significant uptick in exports during 2025, with shipments reaching 1.58 million metric tons—a 17.5% year-over-year increase according to the National Statistics Office of Vietnam. This flood of robusta availability is capping gains in that segment, demonstrating how regional supply dynamics create divergent price paths between coffee varieties.

Inventory Patterns Signal Underlying Tension

The inventory picture reveals important clues about market tightness. ICE-tracked arabica stocks had compressed to 398,645 bags as of November 20—a 1.75-year low—before recovering modestly to 456,477 bags by late December. Similarly, robusta inventories experienced compression, dropping to 4,012 lots (a one-year nadir) before bouncing back to the 4,200+ lot range.

This inventory volatility, combined with earlier disruptions to US coffee imports, suggests that supply chains remain under strain. US purchases of Brazilian coffee declined 52% from August through October compared to the same year-earlier period, falling to 983,970 bags as American importers faced elevated tariff costs. While those tariffs have since been reduced, inventory positions remain constrained.

Long-Term Supply Outlook Creates Complexity

Brazil’s 2025 harvest projections, recently elevated by the country’s Conab agency, point to 56.54 million bags—a 2.4% increase from the prior forecast of 55.20 million bags in September. However, this still represents a 3.1% decline year-over-year according to December forecasts from the USDA’s Foreign Agriculture Service, with total Brazilian output projected at 63 million bags for 2025/26.

Vietnam’s production trajectory paints a different picture. The country’s 2025/26 coffee output is anticipated to expand 6% to 1.76 million metric tons (29.4 million bags), reaching its highest level in four years. The Vietnam Coffee and Cocoa Association indicated that with favorable weather, output could potentially surge an additional 10% above the previous season. This ascendant robusta production stands in contrast to the projected 4.7% decline in global arabica output.

Global Market Rebalancing

The International Coffee Organization documented a 0.3% year-over-year drop in worldwide exports for the current marketing year (October through September), reaching 138.658 million bags. Looking ahead, global coffee production for 2025/26 is expected to reach 178.848 million bags, a 2% increase from the preceding year, according to the USDA’s Foreign Agriculture Service report released December 18.

The supply-demand intersection reveals tightening conditions: ending stocks for 2025/26 are projected to decline 5.4% to 20.148 million bags, down from 21.307 million bags in the prior year. This contraction in global inventories, coupled with arabica production headwinds from Brazilian weather concerns and divergent regional supply dynamics, continues to provide price support. The market is essentially trading on the tension between constrained arabica availability and expanding robusta supplies, creating a bifurcated outlook for the two coffee varieties.