Global Coffee Price Correction Deepens as Brazil Supply Outlook Strengthens Amid Rising International Competition

The international coffee market is facing significant downward pressure, with prices retreating sharply on Friday amid a confluence of bearish factors. March arabica coffee futures declined by 13.25 points (-3.845%), marking a 5.5-month low, while March robusta contracts fell 66 points (-1.58%), reaching a 3.5-week low. This coffee price decline reflects growing concerns about abundant supplies entering the global market, with major producers signaling robust production ahead.

Coffee Price Decline Accelerates on Weather-Driven Supply Recovery

The immediate catalyst for the recent coffee price retreat centers on weather forecasts for Brazil’s primary growing region. Steady rainfall is expected throughout the week across Minas Gerais, which supplies a substantial portion of global arabica coffee. This precipitation alleviates drought concerns and strengthens crop prospects, a development that weighs heavily on international coffee pricing sentiment.

Adding to downward pressure on coffee prices, inventory levels have recovered sharply in recent weeks. ICE-monitored arabica inventories fell to a 1.75-year low of 398,645 bags in mid-November but have since rebounded to 461,829 bags in January, marking a 2.5-month high. Similarly, robusta inventories experienced a comparable recovery pattern, dropping to a 1-year low before rising to 4,609 lots recently. This inventory bounce reverses the supply-tightness narrative that previously supported elevated coffee price levels.

Brazil and Vietnam Drive International Coffee Supply Surge

The global coffee supply outlook is rapidly improving, driven by production expansions in the world’s two largest exporters. Brazil’s coffee production forecast has climbed steadily, with the country’s crop forecasting agency Conab raising its 2025 estimate by 2.4% to 56.54 million bags in December. Meanwhile, Vietnam’s robusta production trajectory appears equally robust, with projections climbing 6% year-over-year to 1.76 million metric tons—a 4-year high.

Vietnam’s export momentum has proven particularly disruptive to international coffee markets. Coffee exports from the world’s largest robusta producer surged 17.5% year-over-year in the early months of 2025, reaching 1.58 million metric tons. The Vietnam Coffee and Cocoa Association forecasts output will be 10% higher in 2025/26 if favorable weather conditions persist, signaling sustained supply pressure on the international coffee price landscape.

Brazilian coffee exports, however, reveal a more complex picture. December shipments contracted significantly, with green coffee exports falling 18.4% compared to the prior year to 2.86 million bags. This decline—particularly the 61% drop in robusta shipments—suggests potential domestic supply constraints that could temporarily support coffee price levels, though the broader trend points toward ample future supplies.

Recovery in Global Coffee Inventories Weighs on Market Sentiment

The expansion of coffee inventories worldwide continues to underpin bearish sentiment for international coffee prices. The International Coffee Organization reported in November that global coffee exports for the current marketing year declined marginally by 0.3% year-over-year to 138.658 million bags, indicating a mature supply dynamic despite inventory drawdowns earlier in the season.

Looking at the broader supply picture, the USDA’s Foreign Agriculture Service projects that global coffee production in 2025/26 will reach a record 178.848 million bags, representing a 2.0% increase year-over-year. Within this global total, arabica production is expected to contract 4.7% to 95.515 million bags, while robusta production will surge 10.9% to 83.333 million bags. This shift in production mix toward robusta—traditionally the lower-priced variety—carries significant implications for international coffee price levels.

USDA Forecasts Record Global Production, Signaling Continued Coffee Price Pressure

The USDA Foreign Agriculture Service’s December report painted a picture of extended coffee price weakness ahead. Brazil’s coffee production is projected to slip 3.1% year-over-year to 63 million bags in 2025/26, suggesting the country’s production ceiling may be moderating. Conversely, Vietnam’s output is forecast to climb 6.2% year-over-year to 30.8 million bags, marking another 4-year high.

Most critically for coffee price stability, global ending stocks for 2025/26 are anticipated to fall 5.4% to 20.148 million bags from 21.307 million bags in the prior season. While this reduction reflects normal market dynamics, it does not suggest imminent supply scarcity. Instead, the combination of record global production, Vietnam’s surging robusta output, and inventory recovery all point toward a persistently challenging environment for international coffee prices in the medium term. Market participants monitoring the commodity should prepare for extended pressure on both arabica and robusta coffee price levels as these structural supply factors take hold.