Robusta Futures Decline as Brazil Braces for Increased Rainfall

Coffee markets faced significant headwinds on Friday, with robusta futures posting a notable retreat. March ICE robusta futures closed down 66 points, representing a 1.58% decline, while simultaneously touching a 3.5-week low. The arabica complex showed even steeper weakness, with March arabica contracts tumbling 13.25 points or 3.845%, marking a 5.5-month low for nearest-month futures. The dual-contract selloff reflects mounting concerns about global coffee supply dynamics and production forecasts in key growing regions.

Weather Shifts Brazilian Supply Outlook

The primary catalyst for Friday’s losses centers on meteorological expectations for Brazil’s primary coffee belt. Forecasts indicate steady rainfall over the next week in Minas Gerais, Brazil’s largest arabica producing region, where weather patterns directly influence crop development and yield expectations. This weather narrative arrives at a critical juncture, as Conab, Brazil’s official crop forecasting agency, raised its total 2025 production estimate on December 4, projecting 56.54 million bags—up 2.4% from the September forecast of 55.20 million bags. Abundant supply projections typically weigh on prices, establishing bearish sentiment that extends across both arabica and robusta futures contracts.

Vietnam’s Export Surge Pressures Robusta Futures

Vietnam’s dominance in robusta production adds another layer of downward pressure on robusta futures. According to Vietnam’s National Statistics Office report released January 5, the country’s 2025 coffee exports surged 17.5% year-over-year to 1.58 million metric tons, demonstrating accelerating international sales momentum. Looking ahead, Vietnam’s 2025/26 coffee production is projected to climb 6% year-over-year to 1.76 million metric tons—equivalent to 29.4 million bags and the highest output in four years. The Vietnam Coffee and Cocoa Association (Vicofa) projected on October 24 that 2025/26 output could reach 10% higher than the previous crop year if favorable weather conditions persist. As the world’s largest robusta producer, Vietnam’s rising output directly constrains robusta futures prices and limits upside potential.

Inventory Recovery Dampens Price Support

After touching multi-year lows, coffee inventories have begun recovering, further undermining price momentum. ICE-monitored arabica stocks fell to a 1.75-year low of 398,645 bags on November 20, but bounced to a 2.5-month high of 461,829 bags by January 14. Similarly, ICE robusta coffee inventories slipped to a 1-year low of 4,012 lots on December 10 before rebounding to a 1.75-month high of 4,609 lots on the latest Friday. This inventory recovery, while modest in absolute terms, suggests stabilizing supplies rather than the tightness that would support higher prices. Historically, rising inventory levels correlate with price weakness, positioning the current inventory trajectory as a headwind for robusta futures.

Mixed Signals on Supply Dynamics

Brazil’s recent export activity presents a more nuanced picture. Cecafe reported that Brazil’s December green coffee exports fell 18.4% to 2.86 million bags, with arabica exports declining 10% year-over-year to 2.6 million bags and robusta exports dropping sharply 61% year-over-year to 222,147 bags. While declining exports might typically support prices, this reduction partially reflects lower producer sales at competitively disadvantageous prices rather than genuine supply scarcity.

Below-average rainfall across Minas Gerais during the week ended January 16 had initially offered price support—the region received only 33.9 millimeters of rain, equivalent to 53% of the historical average. However, incoming weather forecasts for steady rains suggest this dry-period advantage may reverse.

Global Supply Picture Remains Ample

Broader global coffee dynamics add context to the robusta futures weakness. The International Coffee Organization (ICO) reported on November 7 that global coffee exports for the current marketing year (October-September) declined 0.3% year-over-year to 138.658 million bags. However, the USDA’s Foreign Agriculture Service (FAS) projected on December 18 that world coffee production in 2025/26 will rise 2.0% year-over-year to a record 178.848 million bags. Within this total, arabica production is expected to fall 4.7% to 95.515 million bags, while robusta production surges 10.9% to 83.333 million bags—a significant shift in the global robusta futures market dynamics.

FAS specifically forecasted Brazil’s 2025/26 output will decline 3.1% year-over-year to 63 million bags, while Vietnam’s 2025/26 production will rise 6.2% to a 4-year high of 30.8 million bags. Critically, FAS estimated that 2025/26 ending stocks will fall 5.4% to 20.148 million bags from 21.307 million bags in 2024/25, suggesting supplies remain adequate to meet demand expectations.

The confluence of rising Vietnamese production, ample global supplies, recovering inventories, and Brazilian weather forecasts has created a challenging environment for robusta futures price appreciation. Market participants appear to be reassessing the supply-demand balance, with current pricing reflecting expectations of sustained ample global coffee availability throughout the 2025/26 marketing year.