Coffee Market Retreats as Global Supply Pressures Mount

Coffee futures retreated sharply in early 2026, with March arabica contracts dropping 3.85% and March robusta contracts declining 1.58%, signaling growing bearish sentiment in the global coffee market. This pullback reflects a convergence of supply-side pressures and shifting inventory dynamics that are reshaping price expectations for the year ahead.

Supply Surge: Brazil and Vietnam Lead Market Pressures

The decline in coffee prices stems primarily from expanding global supplies. Brazil, the world’s largest arabica producer, has ramped up production estimates significantly. In early December, Conab raised its 2025 coffee production forecast by 2.4% to 56.54 million bags, up from September’s projection of 55.20 million bags. This upward revision signals robust harvests and growing availability in the market.

Vietnam’s coffee sector is similarly accelerating output. The country’s National Statistics Office reported that 2025 coffee exports surged 17.5% year-over-year to 1.58 million metric tons, reinforcing Vietnam’s position as the world’s largest robusta producer. Looking ahead, Vietnam’s 2025/26 production is projected to climb 6% year-over-year to 1.76 million metric tons, with the Vietnam Coffee and Cocoa Association suggesting output could reach 10% higher levels if weather conditions remain favorable—marking a four-year production peak.

Weather Forecasts Add to Near-Term Headwinds

Near-term price pressure also stems from weather forecasts in Brazil’s key growing regions. Minas Gerais, which accounts for the bulk of Brazil’s arabica production, faces steady rain forecasts over the coming weeks. Recent data showed the region received 33.9 mm of rain in mid-January, representing 53% of the historical average, though incoming precipitation is expected to boost soil moisture and overall crop health—a potential supply-positive factor that weighs on prices.

Inventory and Export Dynamics Shift

The recovery in coffee inventories at ICE exchanges has added to downside price pressure. Arabica inventories fell to a 1.75-year low of 398,645 bags in November before rebounding to 461,829 bags by mid-January. Similarly, robusta inventories dipped to a one-year low in December at 4,012 lots, then recovered to 4,609 lots by late January. This rebound suggests tightness may be easing.

However, Brazilian coffee exports show mixed signals. December green coffee exports contracted 18.4% compared to the prior year, with arabica shipments down 10% year-over-year and robusta exports sliding 61% year-over-year. This export slowdown could eventually support prices if supply tightens, though current market sentiment remains focused on the larger production outlook.

Global Context and Forward Outlook

From a broader perspective, the International Coffee Organization reported that global coffee exports for the current marketing year (October-September) declined 0.3% year-over-year to 138.658 million bags, indicating tight supply conditions globally.

Yet the U.S. Department of Agriculture’s Foreign Agriculture Service projects that world coffee production in 2025/26 will rise 2.0% year-over-year to a record 178.848 million bags. This forecast includes a 4.7% decline in arabica production to 95.515 million bags offset by a 10.9% surge in robusta production to 83.333 million bags. The FAS further projects Brazil’s 2025/26 output will edge down 3.1% to 63 million bags, while Vietnam’s output climbs 6.2% year-over-year to 30.8 million bags.

Notably, the FAS forecasts that 2025/26 ending stocks will fall 5.4% to 20.148 million bags from 21.307 million bags in 2024/25, which could provide some structural support to prices if demand remains robust.

For investors tracking this market, platforms like Barchart offer comprehensive commodity analysis and daily updates on coffee futures movements, helping market participants navigate these shifting supply and demand dynamics in real time.