Coffee Prices Rally on Currency Strength and Supply Concerns: A Barchart Market Analysis

March arabica coffee futures advanced 3.09% (+11.00 cents per pound) on Tuesday, while March ICE robusta coffee gained 1.86% (+78 points), as coffee prices posted their strongest performance in two weeks. According to commodity analysis from Barchart, the rally reflects a confluence of bullish factors centered on currency movements and global supply dynamics. The Brazilian real surged to a 20-month high on Tuesday, a development that holds significant implications for the world’s largest arabica coffee producer. This strength in the Brazilian currency is deterring export sales among local coffee producers, creating an unexpected support mechanism for global coffee prices.

Brazilian Real Strength Reshapes the Coffee Export Equation

The appreciation of the Brazilian real to its highest level in 20 months plays a critical role in the current pricing environment. When Brazil’s currency strengthens against the U.S. dollar, exporters face reduced incentives to sell coffee in international markets, as they receive fewer reais per dollar of sales. Cecafe, the Brazilian coffee exporters council, reported that Brazil’s coffee shipments in December fell sharply, with total green coffee exports declining 18.4% year-over-year to 2.86 million bags. The report showed arabica coffee exports dropped 10% year-over-year to 2.6 million bags, while robusta coffee exports fell 61% year-over-year to 222,147 bags.

Adding to the supply constraints from reduced Brazilian exports, weather patterns are working against production in Brazil’s key growing regions. Somar Meteorologia reported that Minas Gerais, Brazil’s largest arabica coffee-growing area, received only 33.9 millimeters of rain during the week ended January 16—just 53% of the historical average for that period. Below-average rainfall in this critical region creates potential stress on the 2025 harvest and supports the bullish outlook for coffee prices.

Global Supply Dynamics Present a Mixed Picture for Coffee Markets

While Brazilian supply constraints are supporting prices, the global coffee market faces competing pressures from robust robusta production in Southeast Asia. Vietnam, the world’s largest robusta coffee producer, reported that 2025 coffee exports surged 17.5% year-over-year to 1.58 million metric tons as of early January. The Vietnamese government’s statistics office also noted that Vietnam’s 2025/26 production is projected to climb 6% year-over-year to 1.76 million metric tons, equivalent to 29.4 million bags and marking a four-year production high. The Vietnam Coffee and Cocoa Association (Vicofa) indicated that production could climb an additional 10% above the previous crop year if favorable weather conditions persist, introducing bearish pressure on robusta coffee prices specifically.

Brazil’s domestic production outlook also presents significant data points for coffee market analysis. Conab, Brazil’s crop forecasting agency, raised its 2025 coffee production estimate by 2.4% in early December to 56.54 million bags, up from its September forecast of 55.20 million bags. However, the USDA’s Foreign Agriculture Service (FAS) projected a different trajectory for 2025/26, forecasting that Brazil’s production will actually decline 3.1% year-over-year to 63 million bags—a notable downgrade from the more optimistic Brazilian forecasts.

Coffee Inventory Signals and Global Production Perspectives

The International Coffee Organization (ICO) reported in November that global coffee exports for the current marketing year (October-September) fell 0.3% year-over-year to 138.658 million bags, suggesting tighter global market conditions. This supports prices despite inventory recoveries on exchange-monitored stocks. ICE arabica coffee inventories, which bottomed at a 1.75-year low of 398,645 bags on November 20, recovered to a 2.5-month high of 461,829 bags by January 14. Similarly, ICE robusta inventories, which hit a one-year low of 4,012 lots on December 10, rebounded to a 1.75-month high of 4,609 lots by late January.

Looking at the broader production outlook, the USDA FAS December forecast projected world coffee production in 2025/26 will increase 2.0% year-over-year to a record 178.848 million bags. However, the composition of this growth tells an important story: arabica production is expected to decline 4.7% to 95.515 million bags, while robusta production will rise 10.9% to 83.333 million bags. The FAS also forecasts that 2025/26 ending stocks will fall 5.4% to 20.148 million bags from 21.307 million bags in the prior year, indicating tightening supplies despite elevated global production.

The Bottom Line for Coffee Market Observers

For participants following coffee prices through barchart commodity analysis platforms and other market trackers, the current environment reflects a market caught between opposing forces. Brazilian currency strength, reduced export availability, and adverse weather in key growing regions are providing support for arabica coffee prices. Simultaneously, robust Vietnamese production and elevated global inventories create headwinds for robusta prices specifically. The divergence between declining arabica supplies and rising robusta supplies suggests that different coffee market segments may experience differentiated price pressures in the coming months. As data from major agricultural forecasting agencies and exchange-monitored inventory systems continues to update, coffee market participants should monitor both supply forecasts and currency movements for clues about the near-term price trajectory.