March arabica coffee (KCH26) today is down -0.05 (-0.01%), and January ICE robusta coffee (RMF26) is down -14 (-0.37%).

Coffee prices have sold off sharply over the past two weeks and posted 4-month lows today.  However, prices recovered from their worst levels as a weaker dollar sparked some mild short covering in coffee futures.

Ample rains in Brazil have eased concerns over coffee crop development and are bearish for prices after Climatempo said Monday that "intense and persistent rainfall" is expected this week in Brazil's coffee-growing regions.   Also, on Monday,  Somar Meteorologia reported that Brazil's largest arabica coffee-growing area, Minas Gerais, received 79.8 mm of rain during the week ended December 12, or 155% of the historical average.  

Weakness in the Brazilian real (^USDBRL) is also bearish for coffee prices as the real fell to a 4.5-month low against the dollar today.  The weaker real encourages export sales by Brazil's coffee producers.

The outlook for ample coffee supplies is weighing on prices.  On December 4, Conab, Brazil's crop forecasting agency, raised its total Brazil 2025 coffee production estimate by 2.4% to 56.54 million bags, from a September estimate of 55.20 million bags.  

Robusta coffee remains under pressure amid concerns about abundant supplies.  On December 5, Vietnam's National Statistics Office reported that Vietnam's Nov coffee exports jumped +39% y/y to 88,000 MT and that Jan-Nov coffee exports rose +14.8% y/y to 1.398 MMT.

Arabica coffee has support from last Wednesday when exporter group Cecafe reported that Brazil's Nov green coffee exports fell -27% y/y to 3.3 million bags.  

Shrinking ICE coffee inventories are supportive of prices.  ICE-monitored arabica inventories fell to a 1.75-year low of 398,645 bags on November 20, although they recovered to a 6-week high of 426,938 bags on Wednesday.  ICE robusta coffee inventories fell to an 11.5-month low of 4,012 lots last Wednesday.

American buyers shunned Brazilian coffee purchases due to previous high tariffs on US imports from Brazil.  Those US tariffs have since been eased, but US coffee inventories are still tight.  US purchases of Brazilian coffee from August through October, during which President Trump's tariffs were in effect, dropped by 52% from the same period last year to 983,970 bags.

Increased Vietnamese coffee supplies are bearish for prices.  Vietnam's 2025/26 coffee production is projected to climb +6% y/y to 1.76 MMT, or 29.4 million bags, a 4-year high.  Also, the Vietnam Coffee and Cocoa Association (Vicofa) said on October 24 that Vietnam's coffee output in 2025/26 will be 10% higher than the previous crop year if weather conditions remain favorable.   Vietnam is the world's largest producer of robusta coffee.

Signs of tighter global coffee supplies are supportive of prices, as the International Coffee Organization (ICO) on November 7 reported that global coffee exports for the current marketing year (Oct-Sep) fell 0.3% y/y to 138.658 million bags.

The USDA's Foreign Agriculture Service (FAS) projected on June 25 that world coffee production in 2025/26 will increase by +2.5% y/y to a record 178.68 million bags, with a -1.7% decrease in arabica production to 97.022 million bags and a +7.9% increase in robusta production to 81.658 million bags.  FAS forecasted that Brazil's 2025/26 coffee production will increase by +0.5% y/y to 65 million bags and that Vietnam's 2025/26 coffee output will rise by 6.9% y/y to a 4-year high of 31 million bags.  FAS forecasts that 2025/26 ending stocks will climb by +4.9% to 22.819 million bags from 21.752 million bags in 2024/25.
 

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