## Coffee Market News: What's Driving Price Movements Across Arabica and Robusta?

The coffee futures market is experiencing notable volatility driven by converging factors across production, supply, and currency markets. Understanding these dynamics reveals a complex interplay between weather impacts, export patterns, and global inventory levels.

### Price Action and Market Drivers

March arabica coffee contracts (KCH26) have advanced 3.7%, climbing 13.30 points to reach a four-week peak. Meanwhile, March robusta futures (RMH26) posted more modest gains of 1.61%, up 63 points. This divergence highlights distinct pressures on each coffee variety, with arabica responding more sharply to production concerns.

The primary catalyst for arabica strength originates from Brazil, which supplies the majority of global arabica beans. The Minas Gerais region—Brazil's coffee heartland—faced weather challenges in early January, receiving only 47.9 mm of rainfall during the week ending January 2. This represents just 67% of the region's historical average, raising concerns about potential crop impacts. Simultaneously, currency movements have amplified the effect: a strengthened Brazilian real reaching one-month highs against the US dollar has reduced export incentives for Brazilian growers, naturally supporting prices.

### The Robusta Picture and Vietnam's Export Surge

Robusta coffee tells a different story. Vietnam, dominating the global robusta market, has ramped up exports significantly. The National Statistics Office of Vietnam disclosed that 2025 coffee exports climbed 17.5% year-over-year to 1.58 million metric tons. This supply surge is capping robusta price appreciation despite underlying support from inventory dynamics.

### Inventory Dynamics Paint a Mixed Picture

Storage levels provide conflicting signals. Arabica inventories monitored by ICE reached a 1.75-year low of 398,645 bags on November 20, though they recovered to 456,477 bags by December 24. Robusta stocks similarly touched a one-year low of 4,012 lots on December 10, with partial recovery to 4,278 lots by late December. Lower inventories typically support prices, yet this tailwind is being offset by production expansion expectations.

### Looking Ahead: Production and Supply Forecasts

Brazil's coffee forecasting agency Conab recently adjusted its 2025 harvest estimate upward by 2.4%, now projecting 56.54 million bags compared to September's 55.20 million bag forecast. Vietnam similarly expects robust expansion, with 2025/26 output forecasted to grow 6% year-over-year to 1.76 million metric tons or 29.4 million bags—a four-year high. The Vietnam Coffee and Cocoa Association even suggested a potential 10% increase above the previous season if favorable weather persists.

### The Broader Context: Global Supply Rebalancing

The International Coffee Organization reported in November that worldwide coffee exports for the current marketing year (October through September) declined 0.3% year-over-year to 138.658 million bags. However, the USDA's Foreign Agriculture Service projects that 2025/26 global coffee production will reach 178.848 million bags—a record level representing 2% growth from the prior year.

This aggregate production masks significant compositional shifts. Arabica output is expected to contract 4.7% to 95.515 million bags, while robusta production is poised to surge 10.9% to 83.333 million bags. Brazil's production will likely decline 3.1% to 63 million bags, whereas Vietnam's output is projected to jump 6.2% to 30.8 million bags. Ending stocks for the 2025/26 season are forecast to fall 5.4% to 20.148 million bags from 21.307 million bags in 2024/25.

### The Tariff Aftermath and Market Recovery

US buyers had significantly reduced Brazilian coffee purchases during the period of elevated tariffs. When these tariffs were in effect—between August and October—US imports of Brazilian coffee tumbled 52% compared to the same period the previous year, reaching just 983,970 bags. Although tariffs have since been reduced, US coffee inventories remain relatively constrained, potentially providing underlying support to prices in coming months.

### Market Takeaway

The coffee market is navigating competing forces: near-term supply tightness and weather concerns supporting arabica, offset by expanding global production capacity and Vietnam's export growth pressuring robusta. Price directions will likely hinge on how production comes in relative to forecasts and whether inventory rebuilding accelerates through the coming season.