Brazil Coffee Market Shifts Global Prices as Weather and Supply Chains Tighten

Arabica and robusta coffee futures surged Monday, with March arabica closing +1.90 (+0.54%) and March ICE robusta advancing +26 (+0.67%). The rally pushed prices to 1.5-week peaks as market participants reassessed global supply dynamics. At the center of this movement: deteriorating weather conditions in Brazil, the world’s largest coffee producer, combined with production shifts across Southeast Asia.

Insufficient Rainfall Threatens Brazil’s Arabica Heartland

Brazil’s coffee market concerns stem from a critical weather event in its most productive region. Somar Meteorologia reported that Minas Gerais, Brazil’s top arabica-growing area, received only 11.1 mm of rain during the week ending December 26—representing just 17% of the historical average. This scarcity has intensified supply worries among traders and buyers.

The brazil market focus on weather patterns reflects the country’s outsized role in global coffee supply. Any disruption to Brazilian production ripples through international pricing and inventory management. Price moves upward as buyers repositioned ahead of potential crop complications.

Geographic Challenges Compound Supply Pressures

Beyond Brazil, Indonesia’s coffee sector faces severe disruption. Widespread flooding has damaged approximately one-third of arabica coffee farms in northern Sumatra, threatening to slash the country’s coffee exports by up to 15% during the 2025-26 season, according to the Association of Indonesian Coffee Exporters and Industry. Robusta crops sustained less damage, but the overall impact underscores geographic vulnerability across major producing nations.

Meanwhile, Vietnam—the world’s largest robusta producer—reported surging exports. Vietnam’s November coffee shipments jumped 39% year-over-year to 88,000 MT, with January-November cumulative exports rising 14.8% y/y to 1.398 million metric tons. Vietnam’s coffee production is projected to climb 6% y/y to 1.76 million metric tons (29.4 million bags) in 2025/26, reaching a 4-year high. The Vietnam Coffee and Cocoa Association suggested output could rise 10% above the previous crop if weather remains favorable.

Market Inventory Dynamics and Trade Policy Shifts

ICE-monitored stockpiles reflect tightening conditions. Arabica inventories fell to a 1.75-year low of 398,645 bags on November 20, though they recovered to 456,477 bags by mid-January. Robusta inventories declined to a 1-year low of 4,012 lots on December 10, recovering to 4,278 lots by late December. These fluctuations signal ongoing tension between supply concerns and modest restocking efforts.

US coffee purchases tell another story. American importers avoided Brazilian coffee during the period when tariffs peaked, causing purchases to drop 52% year-over-year to 983,970 bags from August through October 2025. Even though those tariffs have since been reduced, US coffee inventories remain constrained, limiting buyer flexibility.

Production Forecasts Add Complexity to Brazil Market Dynamics

Brazil’s coffee outlook reveals mixed signals. On December 4, Conab—Brazil’s official crop forecasting agency—raised its 2025 coffee production estimate by 2.4% to 56.54 million bags, up from 55.20 million bags forecast in September. However, the USDA’s Foreign Agriculture Service projected a different trend for 2025/26, forecasting a 3.1% decline in Brazil’s production to 63 million bags.

Globally, the USDA FAS projected world coffee production in 2025/26 will increase 2.0% y/y to a record 178.848 million bags. This gain masks divergent trends: arabica production is forecast to decline 4.7% to 95.515 million bags, while robusta output surges 10.9% to 83.333 million bags. The shift reflects Vietnam’s rising dominance in the robusta market and weather pressures on arabica-producing regions.

Ending Stocks and the Broader Supply Picture

Despite higher production forecasts, global ending stocks are projected to shrink. The USDA FAS estimates 2025/26 ending stocks will fall 5.4% to 20.148 million bags from 21.307 million bags in 2024/25—signaling tightening global supplies despite the anticipated production increase.

The International Coffee Organization reported that global coffee exports for the current marketing year (October-September) fell 0.3% y/y to 138.658 million bags, reinforcing the view that supply remains contested. For traders monitoring the brazil market news and global dynamics, the situation presents a complex interplay: weather pressures in key regions, tariff-induced trade disruptions, rising robusta competition, and shrinking inventories all converging to shape price discovery. The result: cautious optimism among bulls and defensive positioning among those anticipating softer demand ahead.